The scars of others should teach us caution. –St. Jerome
As this is a new year filled with resolutions and new hopes, many people are leaving jobs that they dislike, or do not pay them enough.
During my time practicing law, I have had many of the following types of conversations with people:
“Guess what,” “I got hired for a new job.” “I am going to be working sales, and my territory is Miami-Dade County, Broward County, and Palm Beach County.” “I am really excited because with this amount of territory and customers, I am really going to make some great sales and a lot of money.”
I say something like, “That sounds great, did they make you sign some sort of contract?”
They say, “Yes, I signed a non-compete agreement, but those aren’t enforceable in Florida right?” “I asked my friends in sales and other business, and they all said that non-compete agreements are unenforceable because I have a right to work.” “They can’t keep me from taking care of my family right?”
At this point, my eyes roll back, and I shake my head---as the urban legend of the unenforceable non-compete agreement has reared its ugly head once again.
Please repeat after me, “Non-compete agreements, with some exceptions, are enforceable in Florida.” Where the urban legend of the unenforceability of non-compete agreements comes from, I have no idea, but it is alive and still kicking people really hard.
Section 542.335 of the Florida Statutes contains the elements and framework required for an enforceable non-compete agreement. Like many legal statutes, it can be very confusing for non-lawyers (and lawyers) to understand. There are so many sections, definitions, and subsections, that a person gets lost in a maze trying to figure what they should or should not sign.
In a simplified fashion, the major factors to consider in evaluating whether a non-compete agreement is enforceable, are as follows:
1) Whether the agreement protects a “legitimate business interest?” These can include such things as trade secrets, confidential business information, substantial relationships with prospective or existing customers, goodwill associated with a trademark, geographic location, specific marketing location, and specialized training. A legitimate business interest is an asset that if given to a competing business, would give the new owner of the asset an unfair business advantage;
2) Whether the duration of the agreement is reasonable for a former employee, agent or independent contractor? A duration of six months or less is considered to be presumptively reasonable. A duration of more than two years is considered to be presumptively unreasonable;
3) Whether the geographic scope of the agreement is reasonable? Unfortunately, there is not any language in Section 542.335 defining what a proper geographic limitation is; however, a general rule of thumb is that a court may not be likely to enforce a non-compete agreement for an area where an enforcing party does not do any business;
4)Whether the enforcing party no longer continues in business in the area or line of business that is the subject of the lawsuit to enforce a non-compete agreement? The court may consider this factor as a defense. It must be noted, however; that the court will not consider any individual economic hardship that may be caused to the person against whom enforcement is sought;
5)Whether a court can enter a temporary or permanent injunction enforcing a non-compete agreement? The violation of a non-compete agreement creates a presumption of irreparable injury; thus, a court will enforce a non-compete agreement by any appropriate remedy. An “appropriate remedy” may include a temporary or permanent injunction.
As is always the case, different sets of facts and circumstances may alter a court’s decision regarding the enforceability of a non-compete agreement and what reasonable measure of protection, if any, the court may decide is needed.
I strongly urge all individuals to review employment contract agreements with their lawyer before signing them. On the flip side, if you are a business owner and want to protect your interests, you should review Section 542.335 (and those cases that have interpreted this statute) with your lawyer before attempting to prepare a non-compete agreement that has a good chance of being found enforceable by a court.
It is my hope that the urban legend of the “unenforceable non-compete agreement” be put to rest. I unfortunately have seen too many people find out the hard way, after they happily move on to a new job, that they are severely limited because they signed a non-compete agreement.
-Leonard G. Renaud
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