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Non-compete agreements in a nutshell

Non-compete agreements in a nutshell

In Florida, noncompete agreements are governed by Section 542.335 of the Florida Statutes. Under this statute, these agreements must protect a “legitimate business interest” and be reasonable in scope and duration, to be enforceable. A noncompete agreement must be signed by the person against whom it is being enforced and is subject to multiple defenses. When someone violates a noncompete agreement they may be sued for damages and injunctive relief. The injunctive relief may be as limited as preventing solicitation of customers or as broad as preventing employment in a particular industry or profession for a period of time and within a specified geographical area.

During the course of litigation, the party seeking enforcement will usually file a motion for temporary injunction and request a hearing. That party must prove a “substantial likelihood of success” at a final trial on the merits. The parties to the law suit may present witness testimony and other evidence in support and/or defense of the motion for injunction. Florida courts are authorized to enter injunctions prohibiting the continued violation of a valid non-compete agreement while the lawsuit is pending and before final relief is granted. The scope of the injunction is determined by the terms of the contract and the need for legitimate protection of business interests. The court however must enter a bond, requiring the party seeking injunction to pay money into the court registry to protect the party enjoined, in the event it is later determined the injunction should not have been entered.

The most common and effective defense to enforcement of a noncompete agreement is that the party seeking enforcement materially breached the contract prior to any breach of the restrictive covenant. For example, a failure to pay an employee an agreed upon bonus under an employment agreement resulted in a Florida court deciding that the employer was not entitled to seek enforcement of a non-compete agreement. Another example is wrongful termination of the employee.

For more information on your rights, contact me at H. Clay Parker, Esq.

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