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What are the legal requirements for non-compete agreements?

On Behalf of | May 10, 2017 | Business Litigation |

Generally, non-compete agreements are designed to prevent an employee from learning all the information a company has to offer and using the information they learn to help a new company. The purpose of non-compete agreements is to protect the company when they share proprietary secrets with employees. As a result, these agreements are the source of a number of business disputes in Florida.

Non-competes are intended to protect the employer more than the employee. Employers take risks to hire the employee and trust that the employee will not divulge its secrets elsewhere. However, that doesn’t mean that an employer can take advantage of an employee through the agreement.

There are three requirements that a non-compete agreement must meet in order to be legally valid. First, the agreement must be supported by consideration when it is signed. To have consideration, the employee must promise to not compete with their former company in exchange for something of value. However, the promise of continued employment is not enough. This means that if a company tells an employee to sign the agreement in order to keep their job, there is no consideration and the non-compete will not be valid.

In addition to consideration, the agreement must also protect a legitimate business interest of the employer. Non-competition agreements are intended to protect the employer’s secrets and prevent employees from using their former company’s secrets to benefit another company. Employers must show that they have taken reasonable measures to protect the “secret” information in question and that this information will actually help the employer receive a competitive advantage in the marketplace.

Lastly, the agreement must not put an unreasonable burden on the employee. These agreements must be reasonable in duration and scope. For example, preventing an employee from working in the same industry or in the same town for the next 50 years is unreasonable and will not be valid. Courts may narrow the scope of an agreement as they see fit as long as the best interests of the business are protected without unreasonably inconveniencing the employee. Both employers and employees have rights under non-compete agreements and it is important for courts to protect both of their interests.

Source: FindLaw, “Non-Compete Agreements: Overview,” accessed on May 8, 2017