Now more than a year into the COVID-19 pandemic, we’re still feeling its effects in the employment landscape. As we look ahead at hiring in 2021 and important employment issues we will continue to face, it’s important to first take a brief step back and review the impact the pandemic has had on employment more broadly and on employee contracts and agreements more specifically.
Non-Competes in an Era of COVID
When COVID-19 first reared its head in the U.S. in mid-March of 2020, unemployment claims soared. The Department of Labor reported a record, seasonally adjusted 3.3 million claims during the week ending March 21, 2020, primarily due to layoffs resulting from the pandemic.
With such high unemployment levels, some began to question the enforceability of employee contractual agreements, such as non-competes. Should they still be enforced in an era of COVID-19? Are they “reasonable” when the workforce is facing mass unemployment levels and the alternative is filing for unemployment benefits?
Florida Non-Compete Agreements
Laws surrounding non-competes and other restrictive covenants are state-specific, and in Florida, the statute is quite clear, even in situations that may result in economic hardship to an employee (or former employee).
Fla. Stat. § 542.335 stipulates that a non-compete agreement is acceptable and enforceable if it is supported by a “legitimate business interest” and if the restriction is for a reasonable time, reasonably geographic, and related to your type of business.
A legitimate business interest may include, but is not limited to:
- Trade secrets
- Valuable confidential business or professional information
- Substantial relationships with specific prospective or existing customers, patients, or clients
- An ongoing business or professional practice, by way of trade name, trademark, service mark, or “trade dress”
- A specific geographic location
- A specific marketing or trade area
- Extraordinary or specialized training
In regards to the economic impact of COVID-19, an oft-criticized provision of the statute may come into play in court. The statute states that “in determining the enforceability of a restrictive covenant, a court shall not consider any individualized economic or hardship that might be caused to the person against whom enforcement is sought.” In short, under the eyes of Florida law, a layoff is a layoff, regardless if it is a result of COVID-19 and contractual non-compete agreements are still enforceable.
Hiring in 2021
Looking ahead to this year and beyond, the issue of employment contracts and restrictive agreements will continue to remain relevant. As an employer, it’s imperative to understand the law in terms of your employee agreements, especially laws such as non-competes.
As you hire, protect your business interests today and into the future by ensuring that your documents are thoroughly reviewed by a commercial lawyer. Maintaining compliance with Florida state law is imperative, as is ensuring that they are updated to reflect any recent court decisions.
At Silverberg|Brito, PLLC, we can help you with your employment law questions and concerns. Schedule a consultation today to get started.