Is Your Non-Compete Agreement Enforceable?
Non-compete agreements are enforceable in Florida, and can be a valuable tool for you to protect your business. But not all non-competes are enforceable. One of the worst things that can happen is thinking you’re protected only to have a former employee or business partner be able to compete with you because your non-compete agreement was found to be invalid.
Reasonableness in Non-Compete Agreements
Florida law requires that all non-compete agreements be “reasonable” when it comes to geographic and time restrictions (that is, where the former employee can and cannot compete with your business, and for how long). But what is “reasonable” isn’t always so clear.
The definition of geographic reasonability will vary from case to case, depending on the situation. Cases have said that even a national non-compete could potentially be reasonable, depending on your business (although if you’re thinking about a national restriction, you certainly should get legal advice first to see if that broad of a restriction would be reasonable as applied to your business).
Usually the geographic areas where the company does business, will be held to be a reasonable area for a noncompete restriction. But be aware that just because your business may sell a product or service that is used, sold, or distributed nationally, does not automatically make a national noncompete agreement restriction reasonable.
Time restrictions can also come into play. As a general rule, for an employee or contractor, less than 6 months will almost always be considered reasonable, and more than 2 years will be looked on unfavorably by courts as unreasonable (although those aren’t absolutes). Between that time frame, it is hard to know what a judge or jury will or will not deem to be reasonable.
Reasonability also applies to the scope of the restriction. The restriction must only be so broad such as to protect the company, but the restriction can’t overly restrict the former employee. For example, An employee who fixes computers for hospitals could be restricted from fixing them for other hospitals—but likely not restricted from fixing every kind of computer for every kind of company.
In court, if the agreement is challenged as being unreasonable, it will be the employer who will have to prove a restriction is reasonable—the employee does not have to prove it is not reasonable. The good news for employers is that even if a provision is unreasonable, a court can rewrite the restriction to make it reasonable—it may not have to invalidate the entire non compete agreement.
Courts will also look to see if confidential material, trade secrets, or customer lists have been taken or used by the departing employee. If so, it is more likely that restrictions in the non-compete will be held to be reasonable.
Call the West Palm Beach business litigation lawyers at Pike & Lustig to help protect your business’ trade secrets, and competitive edge in the marketplace. We can review and revise your agreements, if needed.