People and businesses regularly obtain sensitive information through various deals and commercial relationships. A Florida noncompete agreement is a standard contract that can protect a business’s confidential information by preventing others from engaging in conduct that competes with your business.
This article provides a general understanding of noncompete agreement Florida law, and answers to other common questions about these agreements.
What is a noncompete agreement?
A noncompete agreement is a type of contract that places restrictive covenants on a party’s behavior that competes with the other party. The purpose of a Florida non competition agreement is to protect your business interests from those who obtain knowledge of it through various relationships (e.g., a former employee). A noncompete agreement often restricts the following types of conduct:
- Working as an employee for a competitor (sometimes explicitly listed in the agreement)
- Starting a competing business
- Soliciting clients or other resources (i.e., employees of the company)
- Selling important business data
You commonly see noncompete agreements in various business settings (e.g., employment relationships, independent contractors, partnerships, etc.) Any situation where one party receives your sensitive business information might necessitate the use of a noncompete.
When considering the implications of a Non-Compete Agreement in Florida, it’s essential to consult with a qualified attorney who specializes in this area of law. A Florida non compete lawyer can provide valuable insights into the enforceability of these clauses, helping you understand your rights and obligations under such agreements.
Are noncompetes enforceable in Florida?
So are noncompete agreements enforceable in Florida? The simple answer is yes. Florida statutes and courts will enforce the clause of a noncompete agreement in many cases. However, Florida law has requirements that certain noncompete agreement must follow to be enforceable (e.g., geographic area, amount of time).
Trying to enforce a noncompete agreement in a trial court can be an expensive issue to litigate. The reason is that the standards for legal noncompete agreements are somewhat vague (as explained in more detail below). As a result, noncompete cases can take some time and money to determine facts and for trial courts to reach legal conclusions based on those facts.
Current noncompete agreement in Florida law statute
Florida’s noncompete statute governing restraints on trade or commerce requires noncompete agreements to meet specific standards.
The contract must be in writing
A verbal agreement that places a noncompetition obligation on a party will not be enforceable in Florida. All agreements restricting trade or commerce – including noncompete agreements – must be written. Additionally, the party subject to the noncompete terms must sign the written agreement.
A legitimate business interest must exist to justify the noncompete agreement
When enforcing a noncompete agreement, a party must show they have a legitimate business interest that supports the noncompete clause. Florida’s statute further defines legitimate business interests as the following:
- Trade secrets (i.e., a method, formula, technique, pattern, device, or other professional information that derives independent economic value and is the subject of reasonable privacy efforts).
- Valued and confidential business information not otherwise qualifying as a trade secret (e.g., customer lists).
- Substantial relationships with specific customers, patients, clients, etc. The relationship can be existing or prospective in nature.
- The goodwill from an ongoing line of business or professional practice (e.g., a complimentary service).
- The goodwill in a specific geographic location.
- The goodwill in a specific marketing or trade area such as distributors and manufacturers (as an aside, if interested check out our sample agreement between manufacturer and distributor).
- Extraordinary or specialized training.
The statute’s list of items qualifying as legitimate business interests is not exhaustive and could include items not explicitly listed in the statute. Business owners should consider the information and assets of their business that might benefit from protection under a noncompete. A noncompete without support from a legitimate business interest is unlawful and void under Florida law.
The restraints of a noncompete agreement must be reasonable
A court determining the enforceability of a noncompete agreement will review the nature of the restraints to assess if they are reasonable. If unreasonable, a court may limit the noncompete in some ways (e.g., term length or geographic boundary) or, if necessary, void the agreement altogether.
Florida’s statute creates rebuttable presumptions about the amount of time a noncompete agreement can exist under different circumstances:
- The presumption of a noncompete with a former employee, agent, or other contractor is reasonable for 6 months or less, but becomes unreasonable with a term beyond 2 years.
- For noncompete agreements with a former dealer, distributor, franchisee, or licensee, a term of 1 year is reasonable. A term longer than 3 years is unreasonable.
- The presumption for a noncompete related to the sale of a business, its ownership interest, or its assets, a term length of 3 years is reasonable while a term longer than 7 years is unreasonable.
- Noncompete agreements for protecting trade secrets are reasonable if for 5 years or less and become unreasonable at a length beyond 10 years.
Of course, the specific facts of an agreement can refute the presumptions in Florida’s statute. The general theme with the presumptions is that the more equitable the power balance between the parties, the longer a noncompete can be in effect.
Can I fight a noncompete clause in Florida court?
You can challenge the enforceability of a noncompete clause through the Florida court system. When do noncompetes hold up in Florida? The answer will depend on the terms of the written agreement, the facts surrounding the business relationship, and how these items apply to Florida’s statute.
Furthermore, Florida’s statute explicitly states that a court cannot consider economic or other hardships a noncompete places on a person. Exercise great caution before entering a noncompete agreement and fully assess the risk and reward of the deal.
Does the Florida right to work state constitution affect noncompetes?
The short answer is no. Florida’s right to work clause in its state constitution does not have any bearing on the validity of a noncompete agreement. Instead, the right to work clause relates to an employee’s constitutional right to choose to participate in a union (or not) without fear of punishment from an employer.
Are there other ways around a noncompete agreement?
Limited options exist for working around a valid noncompete agreement under Florida state law. However, options do exist. For example, you can move to a place outside the market where the noncompete restricts your activity, allowing you to engage in the same business as before without violating the agreement. Be mindful that many companies today have markets that transcend geographic borders and could limit the viability of this approach.
Another option might be to change career paths or engage in business not restricted under the agreement. This approach allows you to learn a new trade or industry while you wait out the length of the noncompete.
How to Ask to Be Released from a Noncompete
You may be wondering how to get out of a noncompete agreement by just asking. The answer might depend on your relationship with the other party and if any flaws exist in the agreement that you could challenge. In some cases, a settlement or buyout might be possible.
Compensation for noncompete agreement
The compensation or damages from the breach of an employee noncompete agreement could come in a couple of forms. The first is any liquidated damages expressly stated in the written agreement. A court might award further compensation to a damaged party based on other economic losses from the actions of the breaching party (i.e., loss of business, employees, reputation, etc.).
Need help with Florida noncompete laws?
Cueto Law Group is a Miami-based, boutique law firm whose attorneys handle commercial transactions and litigation matters. The firm – founded by international business attorney Santiago Cueto – regularly provides legal advice to people and businesses on the terms of noncompete agreements that protect their business’ confidential information.
If you need help with Florida noncompete law, a noncompete agreement or similar agreement (e.g., a Florida non disclosure agreement), please do not hesitate to contact our office. We can schedule a consultation to learn more about your legal needs and how Cueto Law Group may be able to help.
Contact Cueto Law Group today to schedule a consultation for your noncompete agreement.
FAQs
How long can a noncompete agreement last?
As discussed in the sections above, a valid noncompete can last from a few months to several years, depending on the circumstances. Florida’s statute for restraints on trade and commerce determine appropriate noncompete lengths. For example, a noncompete with a former employer might only last a few months.
Are noncompete agreements enforceable in Florida if fired?
A noncompete agreement will be enforceable in most cases regardless of if you were fired or voluntarily left a company. However, the terms of the written agreement could state otherwise. You should carefully read the terms of the noncompete and seek an attorney’s opinion on its enforceability.
