Did you know that although Florida Courts regularly enforce non-compete agreements, many employees still believe such agreements are not enforceable? The Washington Post recently reported that 1 in 4 workers have signed such agreements in their lifetime, and 12.3 percent are bound by one right now. Employers, here is what you need to know when considering a non-compete clause.
1. Non-compete agreements are enforceable even if prevent someone from making a living in his or her chosen field. Many people incorrectly believe that a non-compete is not enforceable because it prevents someone from making a living; however, a properly drafted non-compete agreement will be limited in its scope and will only prevent an employee from competing with his or her employer’s business and/or from soliciting the employer’s customers and employees. The terms in the agreement will not be a blanket prohibition to prevent an individual from working.
2. Reasonable time and distance. In order to be valid, a non-compete will usually specify a certain time period and specific geographic area in which the ex-employee is restrained from competing with the former employer or soliciting former employer’s customers and employees. Where the agreement suggests an unreasonable duration or distance, in Florida, a court has the authority to modify the time and/or distance limitations to one that is reasonable.
3. Included in employee contract from day one. It is best to have the non-compete agreement executed as a condition of employment either prior to or on the employee’s first day of employment. Having an employee sign the agreement after he or she has commenced employment sometimes creates a very difficult and challenging situation in which the employee may refuse to sign the agreement, leave the company and then compete against the employer using knowledge gained on the job.
4. There is a legitimate business interest. In Florida, non-compete agreements are valid where they protect legitimate business interests. The following are legitimate business interests recognized under Florida law: trade secrets, valuable confidential business or professional information that is not a trade secret, substantial relationships with specific prospective or existing customers, customer goodwill, and extraordinary or specialized training.
5. Consideration. IF you are requiring an employee to sign a non-compete clause, then there must be consideration passing to the employee in order for the clause to be valid. Such consideration has been found, where the employee commenced employment after signing the non-compete agreement.
It is important to note that the enforceability of a non-compete varies by state. To be enforceable in Florida, it must comply with §542.335, Fla. Stat. Another important factor to consider when drafting the clause is to have all of the technical details correct, that way it cannot be void.
Jay M. Levy of the Law Offices of Jay M. Levy in Miami practices in state and federal court, at both the trial and appellate levels. His practice includes business law, commercial law, employment law, family law and civil rights matters, and trial assistance to other lawyers.
