A non-compete agreement – also known as a restrictive covenant – is often put into place to preserve the rights of a company from being exploited by a current or former employee. Per Florida statute, a restrictive covenant can restrict or even prohibit an employee from competing against the company, if the agreement is considered reasonable with regards to the type of business, the area the business is in and the timing of the agreement. However, a restrictive covenant must have a legitimate business interest to be enforceable. What is a legitimate business interest?
Regarding non-compete agreements, there are a number of things that may be considered legitimate business interests. Trade secrets are one such item. Even if something doesn’t rise to the level of trade secret, but is still information that is valuable to the business and is considered confidential, this information could be considered a legitimate business interest. Substantial relationships with either current or potential clients, patients or customers may also be considered legitimate business interests.
Additionally, the goodwill of clients, patients or customers connected to a practice or business via a trademark or a specific area, either geographically or in marketing, may be considered a legitimate business interest. If an employee received specialized training or another training that would be considered extraordinary, this may also be considered a legitimate business interest.
There are certain time limits that make a restrictive covenant reasonable, depending on the type of business at issue. Ultimately, the person who seeks to have the restrictive covenant enforced needs to show that the covenant is reasonably necessary to protect the business interests. If so, the one who opposes the covenant must then show that it is either overlong, overbroad or in some other way could be considered not reasonably necessary.
Non-compete agreements can be complicated to draft, and in some cases are complicated to enforce during business disputes. The information found in this post is not legal advice. Therefore, it may be a good idea to consult with a business litigation attorney familiar with such agreements before forming or executing one.
Source: Florida Legislature, “The 2014 Florida Statutes,” accessed June 22, 2015