New Year, New Job, New Non-Compete Agreement?

February 12, 2019

For many, the new year means a new job. As part of your new employment, you may be asked to sign a Non-Compete Agreement. Read below to better understand some of the basics of Non-Compete Agreements before you sign.

 

What’s a Non-Compete Agreement?

  • A Non-Compete Agreement is a type of contract that creates a restraint on trade or commerce. 

  • While restraints on trade or commerce are generally illegal under Florida law, Non-Compete Agreements are allowed for certain types of business relationships – specifically, employer/employee, franchisees, independent contractors, and distributors, just to name a few.

  • Florida law expressly states that courts shall provide reasonable protection to all legitimate business interests when determining whether to enforce a Non-Compete Agreement.

What does “legitimate business interest” mean?

  • The term “legitimate business interest” is broad and is used across a range of industries to enforce Non-Compete Agreements.

  • Some legitimate business interests that receive protection under Florida law include: trade secrets, confidential business information, substantial relationships with existing customers, customer goodwill, and training received in connection with one’s employment. 

  • Once it’s established that any legitimate business interest may be affected, the burden then shifts to the party bound by the Non-Compete Agreement to prove that the restraint is overbroad, or otherwise unnecessary.

Why should I consult with an attorney before signing a Non-Compete Agreement?

  • Florida law recognizes the following reasonableness of time restrictions for those bound by Non-Compete Agreements (subject to certain exceptions):

    • Up to 2 years: former employees, agents, or independent contractors.

    • Up to 3 years: former distributors, dealers, franchisees, or licensees of a trademark.

    • Up to 7 years: a seller of all or a part of their ownership interest in a company.

  • This can seriously impact your ability to switch jobs within a particular industry.

  • Additionally, a judge can award attorney’s fees and court costs to the party who prevails in enforcing, or challenging, a Non-Compete Agreement.

  • It’s also important to note that, in determining the enforceability of a Non-Compete Agreement, a judge isn’t allowed to consider the individualized economic or other hardship that might be caused to the person against whom enforcement is sought.

I’ve already signed a Non-Compete Agreement, what can I do now?

  • Remember, a Non-Compete Agreement must be supported by a legitimate business interest in order to be enforceable. 

  • If you’re asked to sign, or have already signed, a Non-Compete Agreement and would like a professional’s opinion as to its enforceability, you should consult with an attorney who focuses on these types of issues; especially if you’re considering switching jobs in the new year.

 

Rick Duarte is the owner of The Duarte Firm, P.A., where he focuses his practice on business law. He received his law degree from the Emory University School of Law and has been named a “Rising Star” in Business Litigation by Florida Super Lawyers for 2016 – 2019. Rick also serves as general counsel to emerging and medium-sized businesses, guiding clients through corporate governance, risk management issues, and strategic decisions where business and law intersect.

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