Enforcement of Non-Competition Agreements Under Florida Law
Non-competition agreements—or non-competes as they are routinely referred to—are common and are regularly enforced and upheld by Florida courts. A non-compete is designed to limit what an employee can or cannot do both while employed by a business and after the employment relationship ends although non-competes can apply to persons other than those merely defined as employees.
In a nutshell and in its most basic form, a non-compete prevents an employee of a business from working for a competitor of his employer both during the time he is employed by that employer and for a certain period of time after the employment ends. Florida Statutes Sec. 542.335 governs non-competes in Florida that were entered into after July 1, 1996. Amongst other things, it requires that the non-compete be in writing and signed by the person to whom the non-compete applies and that there be a legitimate business reason for the non-compete. Legitimate business reasons, under Sec. 542.335, include but are not limited to trade secrets defined in Florida Statutes Sec. 688.002(4); customer or client goodwill; substantial relationships with specific customers, whether those customers are existing or even prospective; and valuable confidential business information that does not necessarily rise to the level of being a trade secret.
If a court finds that a non-compete is not supported by a legitimate business interest that non-compete will be deemed unlawful. Simply put, under those circumstances, the non-compete is void and unenforceable
Whether the period of time that a person is prohibited from competing, after the employment or business relationship ends, is ultimately considered reasonable depends upon the nature of that relationship. Florida Statutes Sec. 542.335 provides for the following presumptively reasonable periods:
- when the non-compete is against a former employer, agent or independent contractor and is not part of the sale of a business, the court presumes that a restrictive period of six months or less is reasonable and a period of more than two years is unreasonable;
- when the non-compete is against a former distributor, franchisee, dealer or licensee of either a trademark or service mark and that is also not part of the sale of a business, the court presumes that a restrictive period of one year or less is reasonable and a period of more than three years is unreasonable;
- when the non-compete is against the seller of all or part of a business, the court presumes that a restrictive period of three years or less is reasonable and a period of more than seven years is unreasonable.
The presumptions laid out in Florida Statutes Sec. 542.335 are rebuttable presumptions.
This means that the person subject to the non-compete can bring forward evidence as to why the restrictive period should not be enforced even if that restrictive period falls within the confines of Sec. 542.335.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.
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