Common in many industries, non-compete agreements are typically signed at the time of hiring. They are designed to prohibit an employee from engaging in business or activities that directly or indirectly compete with their employer for a period of time after employment has ended. About 20% of workers in the U.S. have signed non-competes.
Non-compete agreements vary in scope and length, but generally they forbid the following:
- Working for a competing company or individual, including product development or providing competing services
- Selling sensitive data
- Starting your own competing company
- Headhunting former colleagues for a new business
These can be complicated documents, legally speaking, and can be difficult to enforce, depending on which state you’re in. Here are a few things to keep in mind:
How long is too long?
Businesses may lose non-compete challenges if the court decides that the length of the agreement was excessive. In Florida, agreements with a former employee longer than two years cannot be enforced. A typical agreement is six months or less.
Agreements that protect trade secrets for more than five years may also be difficult to enforce.
In some cases, non-compete agreements can’t be enforced if the court determines that the alleged violation occurred in a distant location that doesn’t affect the employer’s potential business reach.
Was the non-compete agreement in writing?
Florida does not enforce verbal non-compete agreements.
Legitimate business interests
An employer must prove that an alleged violation of a non-compete agreement jeopardizes their business interests. This can include the sharing of trade secrets or confidential information of demonstrative value; interfering with relationships or prospective relationships between the employer and customers, clients or patients; utilizing specialized training provided by the employer with a competitor and more.
A former employee breaking and non-compete agreement to alleviate financial hardship, will still be found in violation.
How to work around a non-compete agreement
In Florida, it’s difficult to justify breaking a non-compete agreement, but not impossible. The easiest of these is to find employment at a location outside of what would be considered a former employer’s competitive area.
Otherwise, the former employee must find work in a new industry until the non-compete agreement expires.
If the employee still has a good relationship with their former employer, it never hurts to ask to be released from the agreement.
Non-compete violation damages
Penalties for breaking a non-compete can vary. Damages will likely be explicitly stated in the agreement. Additional damages may be awarded based on economic losses resulting from the violation, including loss of clients, employees and reputation.
If you are unsure about the terms of your non-compete agreement, consult an attorney before moving forward.