How To Determine The Value Of A Non-Compete Agreement In Florida

Operating a business is not an easy task. Instead, it requires attention to detail and plenty of disposition to deal with the various issues that may arise along the road.

In this sense, business owners use several forms of protection against eventual misfortunes, such as acquiring insurance against accidents, etc. Another way to protect a business is to safeguard its products or services from unfair competition, which can be done via non-compete agreements.

Nonetheless, enforcing a non-compete agreement in Florida involves several idiosyncrasies, which may lead to some unexpected court decisions for some company owners.

In this article, you will discover how the value of a non-compete agreement is determined in Florida.

What is a Non-Compete Agreement?

Such as other types of restrictive covenants used by companies in the United States, non-compete agreements are legal agreements in which an employee promises not to compete with an employer’s business during a specified period and location, either during or post-employment.

This type of legal commitment permits employers to prevent employees, contractors, licensees, and distributors from learning its business activities, and at some point, becoming a direct competition.

Worst of all, there are cases in which the employee leaves a business only to open up a new company to compete directly with the ex-employer. Such a situation can give the employee an unfair competitive edge. Plus, the employer’s knowledge about that type of business and industry was acquired at the expense of the employer.

Hence, employers in Florida have the option to use a non-compete agreement to prevent such type of situation.

Enforcing a Non-Compete Agreement in Florida- As Provided by Law

In Florida, agreements with restrictive covenants such as non-compete agreements are governed by Florida Statute Section 542.335.

First, Florida law provides that “a court shall not enforce a restrictive covenant unless it is set forth in a writing signed by the person against whom enforcement is sought”. Plus, it provides that “the person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant.”

Hence, to enforce a non-compete agreement the employer must have a written document signed by the employee.

In this case, the term “legitimate business interest” is defined by Florida Statute to include, but not be limited to:

• Trade secrets.
• Valuable confidential business or professional information that otherwise does not qualify as trade secrets.
• Substantial relationships with specific prospective or existing customers, patients, or clients.

Plus, it requires the customer, patient, or client goodwill to be associated with:

• An ongoing business or professional practice, by way of trade name, trademark, service mark, or “trade dress”.
• A specific geographic location; or
• A specific marketing or trade area.
• Extraordinary or specialized training.

In any case, a restrictive covenant not supported by a legitimate business interest is unlawful, hence being considered unenforceable.

In this sense, we recommend employers to be careful when issuing and signing a non-compete agreement in Florida. This type of legal agreement requires a personalized approach, as the business owner needs to tailor the agreement to protect the company’s activities properly.

Before taking any action, seek guidance from a business attorney in Florida to get expert assistance on the matter.

Are Florida Non-Compete Agreements Enforceable in Reality?

Yes, courts in Florida will enforce a non-compete agreement if the litigation meets all the requirements.

For instance, let us say a former employee leaves his old employer and takes a list of customers with him. The list has plenty of contact information that shouldn’t be disclosed for a pre-defined period in a non-compete agreement, which was signed by the employee.

In case the former employee starts contacting his old employer’s customers to transfer them to the new employer, the old employer may be able to enforce their non-compete agreement.

Nonetheless, to enforce the non-compete agreement, the employer must be sure that all the basic requirements for litigation are met, as provided by F.S Section 542.335.

In Which Cases a Non-Compete Agreement May Not be Enforceable in Florida?

Generally, it is not possible to enforce a non-compete agreement when the former employee does not solicit, sell to, contact, or do any business with his/her old employer’s customers.

Also, it is not possible to enforce a non-compete agreement in case the former employee is not using trade secrets or confidential information as a competitive edge against a former employer.

Enforcing a Non-Compete Agreement in Florida- Attention to Detail

When enforcing a non-compete agreement, employers must be careful with the length of time of the agreement.

For instance, any restraint 6 months long or less is considered presumably reasonable, while restraints with more than 2 years are presumed unreasonable. There are cases in which a court has enforced a restraint up to 2 years without questioning the agreement’s reasonability.

Also, an employer must pay attention to the geographic location restricted in the agreement- whether the clause is determined by county, distance, or geographic area.

In case the former employer does not conduct any type of business activity within the area covered by the agreement, the court will most likely limit the area of enforcement to the area where the former employer conducts its company’s activities.

We Can Help You to Deal with Non-Compete Agreements in Florida

The process of enforcing a non-compete agreement in Florida may be complex and time-consuming. Hence, do not waste time with uncertainty.

Get in touch with Jurado & Farshchian, P.L. today by calling (305) 921-0440 or emailing [email protected] to schedule a consultation.