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Can your company enforce its non-compete agreement in court?

| May 15, 2020 | Business Law

Companies across Florida invest heavily in developing their brand and finding ways to stand out from their competitors. When you find something that works for your business, whether it’s a secret recipe for lemonade, a unique manufacturing process or a client list that never fails to yield sales when you need them, those critical pieces of information are trade secrets that your business depends on for its operations.

When you share those secrets with your staff or give them access to formulas, client lists and other proprietary information, you likely do so because you expect them to work in the best interests of the company. Unfortunately, some people will try to gather information from an employer in order to profit off of it later.

As such, including non-compete agreements in employment contracts, especially for those who will have access to trade secrets, is a common practice. However, companies often discover that their non-compete agreement may not hold up in court, meaning that they wind up on the losing end of a contract dispute with a former employee. What makes a non-compete agreement enforceable in Florida?

Under the law, Florida requires that non-compete agreements be reasonable

State statutes are clear about the ability of an employer to place economic restrictions on a worker via contract. These restrictions must be reasonable and must not cause harm to the other party. Deciding what is reasonable is open to interpretation, but there are certain standards that can help you determine if the language in your agreement will seem reasonable to the courts.

Generally, reasonableness is defined by having specific limitations on the non-compete agreement. Geographic limitations are common. Not allowing someone to work within so many miles of your business in the same industry or in the same county is a common practice. Having no geographic restrictions may imply that they are prohibited from seeking employment in the same field in Florida, which could represent an undue hardship for the worker.

Additionally, the time frame for the non-compete agreement should also be reasonable. One year or possibly several years might seem reasonable. A decade or a lifetime agreement will likely not seem reasonable.

Can you demonstrate that the worker received something in compensation?

With any contract, there are certain requirements it must meet in order to be valid under the law. Having benefits for both parties is one of the basic features of a contract. If a contract only benefits one party, the courts may not uphold it.

Generally, companies must offer something in consideration for signing a non-compete agreement. Often, the compensation is a job offer or a promotion, although some companies will also offer a one-time bonus if they retroactively ask existing employees to sign such an agreement.


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