Non-Compete Agreements

AN EXPERT

A non-compete agreement, or covenant not to compete, is commonly found in employment contracts. It is a type of restrictive covenant that is intended to limit a former employee’s ability to compete with a former employer. Non-compete agreements in Florida are governed by Florida’s Anti Trust Act.

Many times the interests of an employer in eliminating unfair competition are at odds with the employee’s interests in engaging in trade and commerce and earning a living. In order for a non-compete agreement to be valid under Florida law, it must be in writing and signed by the person against whom enforcement is sought. Most importantly, a non-compete agreement is enforceable only to the extent it is reasonably necessary to protect the legitimate business interests of the employer. The term “legitimate business interests” includes trade secrets; valuable, confidential business or professional information; substantial relationships with specific prospective or existing customers, patients or clients; customer or client goodwill; or any extraordinary or specialized training. Any restrictive covenant not supported by a legitimate business interest is not valid under Florida law.

Florida law imposes time limitations on a valid covenant not to compete. Any limitation for 6 months or less is presumed to be reasonable, while any limitation more than 2 years is presumed to be unreasonable, although both presumptions are rebuttable. There is no similar limitation on the geographic scope of the restrictive covenant, although it is possible for the person opposing enforcement to establish that the contractually specified restraint is overbroad or not reasonably necessary to protect the established legitimate business interests. The violation of a valid non-compete agreement creates a presumption of irreparable injury to the person or business seeking enforcement. This is also a rebuttable presumption.

We frequently see occasions where an employer attempts to enforce a non-compete agreement against a former employee after the employer has breached another provision in the employment contract, for example, where an employer has not paid an employee pursuant to the terms of the contract. An employer’s breach of another provision in the employment contract can prevent its enforcement of the covenant not to compete.