Florida generally outlaws contracts in restraint of trade or commerce. An exception is that a company can enter an agreement with an employee, contractor, distributor or vendor that limits them from engaging in conflicting business activities. Sellers of businesses can also be restricted from competing. However, there are several requirements that must be met for a noncompete agreement to be enforceable.
The Florida relevant statute provides that a noncompete agreement must be directed at protecting legitimate business interests of the company. These include trade secrets, customer or lead contact information, and proprietary information about the company and its operations. Also included is customer goodwill associated with a trade name or mark, a geographic location or a marketing or trade area.
The noncompete agreement must be reasonable in duration. In cases not involving trade secrets or the sale of an equity interest in a business, a noncompete agreement that is to last six months or less would be considered reasonable while an agreement that lasts more than two years would not.
The noncompete agreement also must be reasonable in terms of its geographic reach. If the customer base of a business is primarily in one city or county, an agreement that prohibits an employee from working for a competing company anywhere in Florida or nationally would likely be considered overbroad.
The noncompete agreement must also be reasonably necessary to protect the company’s line of business. If the company is engaged in the sale of federal and state tax preparation software to accountants, and the former employee will now be selling business software to doctors or lawyers, a court would probably find the noncompete unnecessary.
A Florida court will generally construe a noncompete in the light most favorable to the company seeking enforcement and will modify a restraint as needed to make it enforceable. The person challenging the agreement has the burden of proving it is overbroad, overlong or unrelated to the line of business it allegedly protects.
A company can seek enforcement of a noncompete by means of a temporary or permanent injunction. The court will presume the company would suffer irreparable injury from a violation of a valid agreement. The court will not consider evidence of economic or other hardship that might result to the former employee if the agreement is enforced.
If your company needs assistance in crafting valid noncompete agreements or in reviewing existing ones to make sure they are enforceable, consult with a Florida business attorney experienced in this area. Employees who have signed or are being asked to sign noncompetes will also benefit from obtaining legal counsel.
H. Clay Parker, Esq. advises Central Florida clients, including businesses and employees, on the enforceability of noncompete agreements and represents clients involved in non-compete disputes in Court. Please call 407-216-2504 or contact us online to schedule an appointment at our Orlando office. In cases related to civil or business litigation, we offer a $50 initial consultation.
