In Florida’s competitive business world, training your employees on company methods is often critical to success. However, the fear of these employees taking these valuable skills to a competitor is a legitimate concern for many business owners.
To address this challenge, many businesses require their employees to enter non-compete agreements. However, the effectiveness of these agreements is limited by Florida Statute 542.335, which aims to protect free commerce and trade in the state of Florida. In this blog post, we will discuss a few important considerations:
1. Enforceability Conditions:
The statute emphasizes the importance of reasonableness in the terms of non-compete agreements. For small businesses looking to protect their interests, this means ensuring that the restrictions in time, geographic area, and line of business are reasonable.
2. Requirements for Enforcement:
Small businesses must be meticulous in documenting non-compete agreements. These contracts should be in writing and signed by the sales representatives against whom enforcement might be sought.
3. Legitimate Business Interests:
To be enforceable, a non-compete agreement must have a legitimate business interest. This could include protecting trade secrets, confidential business information, customer relationships, goodwill, or investments in specialized training.
4. Necessity of Restraint:
Small businesses should establish that the specified restraint is reasonably necessary to safeguard their legitimate business interests. However, if challenged, the burden is on the opposing party to prove that the restraint is overbroad, overlong, or not reasonably necessary.
5. Presumptions for Time Limitations:
The statute provides specific time presumptions based on the nature of the restrictive covenant. Small businesses need to align their non-compete agreements with these guidelines to increase the likelihood of enforceability. In most situations, a court will presume restrictions that are 6 months or less to be reasonable, and will presume restrictions lasting longer than two years to be unreasonable.
6. Considerations for Enforcement:
When enforcing non-compete agreements, small businesses should be aware that the court will not consider individualized economic hardships faced by the employee. However, the court may consider the impact of enforcement on public health, safety, and welfare.
7. Enforcement and Remedies:
In the event of a breach, small businesses can seek remedies such as temporary and permanent injunctions, ordering the employee to cease violations of the agreement. Additionally, violation of a valid non-compete agreement creates a presumption of irreparable injury to the business.
8. Attorney’s Fees and Costs:
While not always included in small business contracts, the statute allows for the potential award of attorney’s fees and costs to the prevailing party in actions related to the enforcement or challenge of non-compete agreements. This can be both a blessing and a curse, depending on who wins in the court case.
Closing
While non-compete agreements can be lawful in Florida, business owners should be aware of the limitations imposed by Florida Statute 542.335. By understanding the enforceability conditions, requirements, and limitations outlined in the statute, small businesses will have the best chance of having the agreements enforced.
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READY LEGAL 