Non-Compete Agreements Explained: Enforceability & Litigation

Non-compete agreements are contracts between an employer and employee that restrict an employee’s ability to work for a competing company, solicit the employer’s clients, or start a competing business after they leave a job. Depending on what the law in a particular state says about such agreements, they may be fully enforceable, partially enforceable, or not at all enforceable. Non-competes can protect businesses from harmful competition and from the loss of trade secrets and other competitive advantages when employees leave. They can also deprive employees of the ability to work in their chosen field and use their skills. A typical non-compete agreement includes the parties: the employer and employee. It includes the duration—the amount of time the employee is prohibited from competing with the employer. It includes the geographic area—the area of the country or world in which the agreement is meant to apply. It includes the scope of business activity—what businesses or activities the employee is prohibited from engaging in. It includes the consideration—what is offered in exchange for the employee’s agreement to the non-compete, such as a job offer or a monetary payment.

Are Non-Competes Enforceable in Florida?

Non-compete agreements are generally enforceable in Florida under Florida Statute § 542.335, provided they meet the requirements set forth in that statute. In order to be enforceable, a Florida non-compete agreement must be in writing and signed by the party against whom the agreement is being enforced. It must also be reasonably necessary to protect one or more legitimate business interests. It must be reasonable in time—courts have found that restraints of six months to two years are presumptively reasonable. It must be reasonable in area—non-compete agreements are typically limited to the geographic area in which the employer does business. It must be reasonable in line of business—non-compete agreements must be limited to the specific line of business in which the employee was employed. Florida courts may modify overly broad non-compete agreements to make them enforceable, rather than striking them down entirely.

What Types of Businesses Use Non-Competes?

Non-compete agreements are common in many types of businesses and industries. They are frequently used in technology, where companies rely on proprietary software, algorithms, and other trade secrets that could provide a significant advantage to a competitor. Professional services firms such as law firms, accounting firms, and consulting firms also use non-competes to protect their client relationships and confidential information. Healthcare businesses including hospitals, medical practices, and other healthcare providers use non-competes to protect their patient relationships and confidential information. Sales organizations that have invested time and resources in building client relationships use non-compete agreements to protect those relationships. And companies with valuable trade secrets such as formulas or processes use non-competes to protect their trade secrets and proprietary information.

Non-Competes and Civil Litigation

When a non-compete dispute arises, civil litigation is often the result. In Florida, employers who believe a former employee has violated a non-compete agreement may seek an injunction to prevent further violations, as well as damages for any harm caused. Former employees who believe a non-compete is unreasonable or unenforceable may seek a declaratory judgment from a court. These disputes can be complex and costly. If you are an employer or employee involved in a non-compete dispute, consulting with a knowledgeable civil litigation attorney at Ludwin Law Group can help you understand your rights and options.