Small business owners invest a lot of time, money, and resources into developing their products and services, and it’s important to prioritize protecting those business interests.
One tool business owners can use to protect against potential competitive threats to their company is to have employees and contractors sign non-compete agreements.
Prior to having an employee sign one, however, it’s important to consider some important elements of the non-compete, including its enforceability and reasonableness.
What is a non-compete agreement?
A non-compete is a document employers use to protect against unfair competition. In signing it, employers must agree not to engage in direct competition with the employer. For example, working for a competitor or hiring staff away from the employer could be a violation of the agreement.
Are non-competes enforceable in Florida?
Non-compete laws vary by state, so it’s essential to consult a local commercial attorney prior to drafting one. In Florida, Statute §542.335 governs the rules and regulations of restrictive covenants. As long as the contracts are reasonable in time, area, and line of business, they are not prohibited in Florida.
In order to justify the non-compete and for it to be enforceable, an employer must prove the existence of one or more legitimate business interests as noted in Florida Statute §542.335(b). The term “legitimate business interest” includes, but is not limited to:
- Trade secrets
- Valuable confidential business or professional information that otherwise does not qualify as trade secrets
- Substantial relationships with specific prospective or existing customers, patients, or clients
- Customer, patient, or client goodwill associated with:
- An ongoing business or professional practice, by way of trade name, trademark, service mark, or “trade dress;”
- A specific geographic location; or
- A specific marketing or trade area.
- Extraordinary or specialized training.
If you have a legitimate business interest to protect, it may be reasonable for you to have employees sign non-compete agreements. As you and your attorney draft your agreement, you’ll want to consider how narrowly you define the scope of the non-compete and if you want to set time and/or location limitations.
It’s also important to remember that non-compete agreements are not “one size fits all.” They need to be tailored for the specific employee and position.
At Silverberg|Brito, PLLC, our team of commercial lawyers can help you draft effective and enforceable non-compete agreements for your Florida business. Get in touch anytime to ask your questions and get expert legal advice.