Last Updated on December 10, 2022 by Anda Malescu
We discuss the recognition and enforcement of a non-compete agreement Florida in relation to other states and the legal status of non-compete agreements in the United States generally. This is because in recent years these contracts have become highly controversial across the country with legislative, executive and judicial branches of several state jurisdictions acting to prevent the enforcement of noncompete agreement.
A non-compete agreements is usually a contract entered into between an employer and an employee in which the employee agrees not to work in a similar profession with or for a competitor of the employer for a certain period of time or within a certain geographic area. A non-compete agreement is typically used in employment but can also be used between business partners or when purchasing a business to prevent the seller to compete. While many people enter freely into a non-compete agreement and believe that it can easily be broken without consequence, the reality is that the enforceability and recognition of a non-compete agreement depends on the law of the state that governs the agreement.
In the United States, some states strictly enforce non-compete agreements while others only enforce them if they are reasonable in scope and term. Most states like New York, New Jersey, Pennsylvania and Texas disfavor non-compete agreements and some states like California and Massachusetts go further and are very restrictive in enforcing non-compete agreements. In Florida, however, non-compete agreements are valid and enforceable.
Since 1996, any non-compete agreement Florida is governed by Florida Statute §542.335. According to the current Florida law, noncompete agreements are not prohibited as long as such contracts are “reasonable in time, area and line of business.” A non-compete agreement in Florida is enforced only if it is in writing and it is signed by the person against whom the contract can be enforced. The Florida statute goes on to provide that the person, whether individual or business entity, seeking to enforce a non-compete agreement under Florida law must plead and prove the existence of “one or more legitimate business interests” justifying the restriction on competition. Pursuant to Florida law, the legitimate business interests that can justify restricting competition can include, among others, trade secrets, valuable confidential information, substantial relationships with customers, patients and clients, goodwill associated with an ongoing business or professional practice, a specific geographic location or a specific marketing or trade area, and extraordinary or specialized training. Nevertheless, the person seeing enforcement of a noncompete agreement in Florida must also show that the contractual restriction is reasonably connected to the protection of the legitimate business interests identified.
In addition, a noncompete agreement Florida can have time restrictions. In the case of former employees that does not involve the sale of a business, the court presumes restraints on competition of 6 months or less as reasonable and unreasonable restraints of 2 years or more. In the case of former distributors, dealers, franchisee or licensee, the court presumes restraints on competition of 1 year or less reasonable and unreasonable restraints of 3 years or more.
However, Florida tends to be a pro-employer state and aside from the standard principles above, the Florida statute provides for other principles that are pro-employer. Specifically, Florida courts are not permitted to consider any financial or hardship to the employee in determining whether or not to enforce the non-compete agreement. Further, Florida courts cannot use rules of contract construction that would require the court to interpret a non-compete agreement in Florida against the drafter of the contract or against the restraint on competition.
Contact us, your business lawyer in Florida to obtain more information regarding non-compete agreements Florida or schedule a consultation.
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