Non Compete Agreements in Florida: What is a Legitimate Business Interest?
A non compete agreement is a contract under which one party commits to refraining from engaging in competition with another party for a pre-defined period of time. Notably, a non compete agreement is a restrictive covenant and a restraint on trade. Under Florida law (Florida Statutes § 542.335), non compete contracts must conform to stringent standards in order to be legally valid.
Among other things, the party seeking to uphold the non compete agreement must be able to demonstrate that the contract pertains to a ‘legitimate business interest’. Without a legitimate commercial interest, the non compete agreement will not be enforced. In this article, our West Palm Beach business law attorneys explain how Florida courts define a ‘legitimate business interest’.
Legitimate Business Interests: Explained
For policy purposes, Florida courts are very skeptical of restraints on trade. Restrictive covenants, including non compete provisions, must have a valid commercial purpose. As quoted from the relevant Florida statute, a non compete that is not backed up by a valid business interest is “unlawful and is void and unenforceable.”
Of course, this raises an important question: How does Florida define a legitimate business interest for the purposes of a non compete agreement? The short answer is that it depends on the specific circumstances. However, within the state statute, there are five explicit legitimate business purposes that are highlighted. A legitimate business interest should implicate one of the following:
- Trade secrets;
- Valuable and confidential business information;
- Existing and significant relationship with customers;
- Customer/client goodwill; or
- Specialized professional training.
If the non compete agreement does not, in some form, pertain to one of those five topics, then it may be deemed unenforceable in Florida. If you have questions about your non compete agreement, please contact a lawyer right away.
Protect Your Non Compete Agreements — Keep the Scope as Narrow as Possible
If your company relies on non compete agreements, you must ensure that these contracts are valid under Florida law. A non compete that is deemed to be unenforceable could cause your business major headaches down the road.
As a general matter, it is recommended that companies keep the scope of non compete contracts as narrow as reasonably possible. A professionally drafted non-compete agreement with a well-defined legitimate business interest is one that your company will be able to rely on. If you need assistance crafting a non compete agreement, an experienced Florida business law attorney can help.
Discuss Your Case With Our South Florida Non Compete Agreement Attorneys Today
At Pike & Lustig, LLP, our West Palm Beach business litigation lawyers have deep experience negotiating, drafting, reviewing, and litigating the full range of non compete agreements. If you have questions about non compete agreements, we are here to help.
To arrange a strictly confidential review of your case, please reach out to us right away. With office locations in West Palm Beach and Miami, we handle non compete agreements and other business law matters throughout Southeastern Florida.