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Non-Compete Agreements in Florida: Are They Enforceable?
Non-compete agreements are commonly used by businesses to protect trade secrets, limit unfair competition, and retain clients. Like most business agreements, not all non-compete agreements are created equal, and not all are enforceable under Florida law (2018 Title XXXIII, Section 542.335).
As a business employer drafting a non-compete agreement, understanding the specific legal requirements that make these contracts valid is crucial. Consulting with a knowledgeable Oakland Park, FL business law attorney can ensure that your non-compete agreements perform as intended, while remaining legal and enforceable.
What is a Non-Compete Agreement?
As a legal agreement or clause in an employee’s contract, a non-compete specifies that the employee may not compete with the employer or reveal proprietary information or secrets, once his or her employment period has ended. Some non-compete agreements specify a certain period during which the employee may not work for a competitor of the business after his or her employment ends.
Although the Federal Trade Commission (FTC) issued a rule banning non-compete agreements in April 2024, exceptions exist, and the rule is currently blocked by a federal court injunction, so it is not yet in effect. If the FTC rule does go into effect, it would prohibit employers from entering into or enforcing non-compete agreements with many workers, but would not affect existing agreements with senior executives.
Additionally, it would not apply to non-compete agreements entered into during the sale of a business. As they stand, a non-compete agreement legally binds a current or former employee from competing with the employer for a specified period following the termination of his or her employment. Under a non-compete agreement, employees are prohibited from disclosing trade secrets. In some cases, a non-compete clause can prevent an employee from securing any position in their field after leaving a previous role.
What Are the Reasons a Non-Compete Agreement Could Be Struck Down?
The burden of proof, in terms of providing a valid and enforceable non-compete agreement, lies with the employer. The reasons a non-compete agreement could be invalidated include:
The Agreement is Overly Broad
If a non-compete agreement is too vague in terms of time, area, or line of business, it can be struck down. The agreement must be clear and concise to be enforceable.
The Non-Compete Agreement is Not Tied to a Legitimate Business Interest
Florida requires non-compete agreements to be tied to legitimate business interests, such as confidential information, specialized training, trade secrets, and customer relationships. If the agreement does not protect one of those interests, it may not be enforceable.
The Non-Compete Agreement Has Unreasonable Restrictions
Even when a legitimate business interest exists, the time limit cannot exceed two years, or it will be presumed unreasonable. The geographic scope of the restrictions must be limited to where the business operates and should only apply to the specific line of business in which the employee was involved.
There are Public Policy Considerations
Public policy considerations hold that a non-compete agreement should never unreasonably restrict a person’s ability to make a living, nor should it harm the public interests.
What is the Blue Pencil Rule in Florida?
When a Florida court modifies an overbroad non-compete agreement, narrowing the terms rather than voiding the entire agreement, this is known as the "blue pencil rule." A court can strike out parts of the agreement that are too restrictive while enforcing the reasonable parts. For example, if a non-compete prohibited the employee from working anywhere in the state, the court might apply the blue pencil rule to restrict the geographic location to a specific city or county.
Contact a Broward County, FL Business Law Attorney
If you are an employer considering having employees sign a non-compete agreement or need another type of business agreement, it can be beneficial to consult a skilled Ft. Lauderdale, FL business law attorney from The Elliot Legal Group, P.A.. Attorney Elliot will work hard to ensure you have customized, enforceable agreements. He also practices international business law and is a licensed solicitor in both England and Wales. Call 754-332-2101 to schedule an initial attorney meeting.
