Enforcing restrictive covenants can be tricky in Florida
H. Clay Parker, Esq. posted in Noncompete Agreements on Thursday, December 1, 2016.
Restrictive covenants prohibit employees from sharing information about their employers’ businesses during employment. This information could include processes, technology or client lists, among other aspects of a business that contribute to its uniqueness or give the business an edge.
These covenants are often included in non-compete agreements, partner agreements or shareholder agreements entered into by doctors. Enforcing them can be a tricky process due to the way Florida law deals with them.
What makes restrictive covenants so tricky?
The simple answer to this question is that three disparate sets of rules could apply. Then, there is the fact that Florida’s courts have interpreted the statutes differently.
Therefore, there is little to no consistency in the enforcement of these provisions. Cases are often decided based on the individual circumstances in the case, which might not always apply to other similar situations. This leaves doctors and employers in an awkward position.
The latest changes to the law attempt clear up any ambiguity
The latest changes in Florida law propose a test for the courts to use when considering the enforcement of restrictive covenants. The “legitimate business interest” test outlines the types of information that can be subject to restrictive covenants, including the following:
- Substantial client, customer or patient relationships
- Extraordinary or specialized training
- Client, customer or patient goodwill associated with a trademark, trade name or specific geographic location
- Trade secrets (as defined by statute)
- Confidential business information not qualifying as a trade secret
- Specific trade or marketing area
The statute also attempts to clear up any issues regarding what time limits on the covenants are considered to be reasonable or unreasonable. If a court determines that the covenant is overbroad, it may narrow it without invalidating the remainder of the agreement in which it is contained.
So how do you avoid ending up in court over a restrictive covenant?
Whether you are the employer or the employee, it would be advisable to have any non-compete, partner or shareholder agreement reviewed by an attorney prior to signing it, especially if restrictive covenants are included. Your attorney should be able to ensure that the provisions, along with the entire contract, comply with current statutes.
Doing so could help reduce or eliminate the need for litigation in the future. Sometimes, however, litigation is unavoidable, and your attorney should be able to effectively represent you in court or during mediation or arbitration, if appropriate.
