Understanding Enforceability of Non-Compete Agreements Under Florida’s Non-Compete Statute

Florida is an “at will” employment state. What that means is that an employee can quit at any time and an employer can fire an employee at any time for any reason as long as it is not an illegal reason. Some examples of illegal reasons would be discriminatory reasons (i.e., Race, sex, religion) other examples of illegal reasons are because an employee files a worker’s compensation claim, or because an employee reports illegal activity on the part of the employer. Employees who have contracts with their employers are governed under those contracts. There are also specific contracts known as Non-compete agreements that bind an employee during and after employment with an employer.

Florida has a Non-compete Statute which can be found at Florida Statute 542.335. This statute governs the enforceability of non-compete agreements. The basic premise of the statute is that the agreement must be reasonable. Reasonable as to time and reasonable as to geographic location. It also must be ”reasonably necessary to protect the legitimate business interest” of the employer. Florida courts have essentially decided these cases on a case-by-case basis look at each case and its specific facts to determine the reasonableness of a non-compete agreement. There is no “bright line” test as to what will be held to be a valid non-compete agreement. Your Jacksonville employment attorney can assist you in determining whether or not your non-compete agreement is valid or questionable. Case law has set some guidelines for the employee and employer to follow but the area of the law is still somewhat ambiguous. For example, case law has indicated that a two-year term following the employee’s termination from employment was a reasonable timeframe. In regard to geographic location, the courts have held in some cases that even a statewide provision was reasonable depending upon the whether the employer does business statewide and whether it has regional offices within the state. Most litigation regarding non-compete agreements hinge on what is a protectable legitimate business interest.

In a recent case, White vs Mederi Caretenders Visiting Servs. Of Southeast Florida LLC, 226 So.3d 774 (Fla. 2017), the Supreme Court of Florida held that a company’s referral source may be a protectable legitimate business interest. In making that ruling, the Court encouraged the active involvement of trial courts in assessing the enforceability of non-compete agreements. The Court emphasized that trial courts were best able to apply the statute to specific fact situations and that the Florida Non-compete Statute and the legislative intent behind the statute “grants trial courts fairly wide discretion to fashion the appropriate context-dependent remedy.” A Non-compete agreement can include an employee’s agreement not to work for the employer’s competitors, an agreement not to solicit the employer’s customers or other employees of the employer and a confidentiality clause. Florida’s Non-compete statute identifies five items that are considered legitimate business interests and they are: trade secrets; valuable confidential information; substantial relationships with customers, patients and clients; goodwill; and extraordinary or specialized training. If your employer is asking you to sign a non-compete agreement, you should take the agreement to a Jacksonville employment lawyer for review before signing it.

The two areas of major criticism with the Florida statute are that it states 1) in determining the enforceability of a restrictive covenant, a court shall not consider any individualized economic or hardship that might be caused to the person/employee against whom enforcement is sought; and 2) the statute prohibits any rule of contract construction that requires the court to construe a restrictive covenant narrowly, against restraint, or the drafter of the contract. These two provisions favor the employer because they are the party that is typically seeking to enforce the noncompete agreement.  Currently, there is no uniform code promoting uniformity among the various different states. California only permits noncompete agreements in the context of a sale of business. Florida is considered to have the most pro-employer noncompete statute in the country. Federal Courts, under Federal Rule of Civil Procedure Rule 65, require that the harm to the employee be considered before injunctive relief is granted. Consequently, if the non-compete agreement falls under Federal jurisdiction some consideration to the effect of injunctive relief on the employee. Oftentimes, even non-compete agreements under state jurisdiction that are in dispute can resolve without litigation so as to reach an agreement that will allow both parties to move forward without compromising or negatively impacting the interest of each other. Contacting your Jacksonville employment attorney is recommended if you receive a “Cease and Desist” letter from a former employer regarding a non-compete agreement.

In addition to the employee/employer context, non-compete agreements are often utilized between a buyer and a seller in the purchase of an ongoing business. The buyer will request a non-compete agreement from the seller so that the seller does not immediately after the sale of a business start a competing business or poach the customers of the business the seller just sold. These types of transactions are also governed by Florida’s Non-Compete Statute. The bottom line is, before signing a Non-Compete agreement, have a Jacksonville employment lawyer review it. If you have already signed a Non-compete agreement and the employer is trying to enforce it, contact a Jacksonville employment lawyer because there may still be room to negotiate with the employer given the fact that the Court looks at each case on a case-by-case basis.

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