Employers commonly require employees to enter into non-compete agreements. This is a written contract in which the employer offers the employee a job in exchange for his or her signed promise not to work for the employer’s competitors or work in the same industry as the employer when the employee’s job ends. One of the purposes of a non-competition agreement is to prevent a former employee from using proprietary information obtained during the previous employment to his or her benefit. Non-competition agreements are enforceable under Florida law if they involve certain industries and are:
- Reasonable in time and area; and
- Reasonably necessary to protect a legitimate business interest.
There is a presumption under Florida law that a non-compete provision of six months or less is reasonable. Likewise, a non-compete provision of two years or longer is presumed to be unreasonable. Either of these presumptions is rebuttable by either party. To overcome the presumption, the party must show by a preponderance of the evidence that the presumption should not be upheld.
The scope of the geographic region where the employee may not compete must also be reasonable. For example, if an employer only operates in one city or one county, a prohibition from competing in that city or county would likely be upheld as reasonable. However, a statewide prohibition would likely not be upheld because it is overbroad.
Line of Business
The line of business in which the former employee is engaged must be reasonably related to the business of the former employer in order for the non-compete provision to be upheld. For example, if the former employee of an auto repair shop goes to work for another auto repair shop working on the same kind of vehicles, a court would likely uphold the non-competition agreement. However, if the former employee goes to work repairing boats, it is unlikely the prohibition would be upheld as reasonable.
Legitimate Business Interest
Finally, the employer must show that the non-compete agreement serves to protect a legitimate business interest. Such interests include, but are not limited to:
- Trade secrets
- Valuable confidential business or professional information not otherwise considered trade secrets
- Substantial relationships with specific prospective or existing customers
- Client goodwill
- Specialized training
Florida Favors Non-Competition Agreements
Once the employer has shown that the non-compete agreement is reasonably necessary to protect a legitimate business interest, the employee must prove that the non-compete provision is overly broad and unnecessary.
Florida courts are prohibited by statute from considering any employee hardship, economic or otherwise, caused by the non-competition agreement. Therefore, the employee will not succeed in arguing that he cannot feed his family if the court enforces this agreement. Instead, the court will look to the factors set forth above to determine whether the non-compete agreement is reasonable.
The bottom line is that employees should seek the guidance of an experienced employment attorney before signing a non-compete agreement. Employees should fully understand how the non-compete restrictions can impact their livelihood if the employment relationship ends. An attorney may be able to help you.