Noncompete Agreements in Florida: Is the Legitimate Business Interest Reasonable?

Noncompete agreements are important in safeguarding businesses and employees alike. A noncompete agreement, or restrictive covenant, is a contractual agreement in which an employee promises not to compete with their employer’s business during employment and for a specified time after the termination of such employment.  While a noncompete clause is usually integrated into an employment agreement, they can also stand on their own as an independent agreement.  

Florida’s noncompete statute provides that restrictions are generally enforceable to protect a business from unfair competition so long as:

  • The contract is reasonable in time, geographic area, and line of business.
  • The restrictive covenant is in writing and signed by the person whom enforcement is sought against.
  • The person seeking enforcement of the restrictive covenant (a) pleads and proves that a legitimate business interest exists and (b) justifies that it’s reasonably necessary to protect that interest.

Florida trial courts use the standard of reasonableness to determine whether a noncompete agreement is enforceable by applying the statute to specific fact situations on a case-by-case basis. 

In the beginning of litigation, both the employer’s and employee’s interests are at stake. The employer has to protect its business interest, which could be customer lists or trade interests, while the employee runs a risk of losing work in their field of expertise for an indefinite amount of time.

A business owner’s victory at this early stage depends on a well-drafted noncompetition agreement, while an employee’s victory depends on whether they can prove their employer materially breached the noncompete agreement. ‌

Enforcing a Noncompete Agreement

As an employer, it’s important to speak to an experienced business lawyer if you’re considering a noncompete agreement to protect your business because there are specific requirements. Overly broad noncompete agreements are unenforceable.

A noncompete agreement can help prevent former employees from sharing confidential information or creating competition with your business for a certain period of time and within a certain geographic area after they are terminated. 

However, to make sure your noncompete agreement is enforced, it should be specific to a particular employee so you’re able to prove that the agreement is reasonably necessary to protect your legitimate business interest. 

In addition, as an employer, it’s important to know if a potential new hire has a noncompete agreement with a former employer — because in some cases, you can be liable to the former employer if hiring the employee would put them in violation of the agreement. However, former employers may decide not to take legal action if the new employee and new employer provide assurances that there will be no solicitation of the former employer’s customers.

Relief for the Employer

For a former employer, the most preferred remedy is injunctive relief because this will stop the violations of the noncompete agreement. This may be a better route because money damages are not always easy to collect or prove.

In Florida, a party seeking a temporary injunction must plead and prove four elements: “(1) the likelihood of irreparable injury, (2) the unavailability of an adequate remedy at law, (3) substantial likelihood of success of the merits, and (4) that a temporary injunction will serve the public interest.”

If you seek a temporary injunction — the most common type of relief — your case will turn on how you demonstrate the “substantial likelihood of success on the merits.” If you can prove this, the injunction will order your employee to stop whatever conduct is violating the noncompete agreement.

Under Rule 1.610, Florida Rules of Civil Procedure, the statute states that the appropriate remedies for enforcement of noncompete agreements are temporary and permanent injunctions. Additionally, when an employee violates a noncompete agreement, there’s a legal presumption of irreparable injury that’s favorable to the employer to grant the temporary injunction.

If you’re the prevailing party, Florida law will allow you to collect reasonable attorneys’ fees from the non-prevailing party.

Enforcing an Overly Broad Noncompete Agreement

‌If the court finds that your noncompete agreement is overly broad, it may use the blue pencil rule to enforce the agreement. Florida courts are allowed to alter and modify the unenforceable or unreasonable parts of a contract and make them reasonable.

Florida courts can modify or “blue pencil” the agreement to cure the issues affecting enforceability. There are multiple cases in which Florida appellate courts have reduced geographical or time restrictions deemed to be overbroad. For example, a judge could change a noncompete clause with a 25 mile  geographical area restriction to a 15 mile restriction or a time period of 2 years to 1 year.

Courts can also deem a restrictive covenant unenforceable if public policy significantly outweighs the legitimate business interests in enforcing the noncompete language.

How to Get Out of a Noncompete Agreement

Even though Florida noncompete agreements are presumed to be valid, there are several potential arguments for employees. Your case will turn on the facts of your particular employment relationship, the business interest at issue, and the scope of the restrictions in the agreement.

Below are possible arguments, depending on the facts of your case:

1. You Were Terminated After Refusing to Sign a Noncompete

If you were asked to sign a noncompete agreement, refused to sign, and were later terminated, you may have a wrongful termination case.

In addition, if the employer created a hostile work environment after you refused to sign, you could be entitled to other remedial actions under state and federal laws, such as:

  • Sex, age, or race discrimination
  • Sexual harassment
  • Whistleblowing

Workers’ compensation retaliation claim filing

2. Employer Materially Breached Your Agreement

If the court found that your employer materially breached your noncompete agreement, you would be relieved from all your obligations under the agreement. However, keep in mind that it’s more difficult to prove a material breach if there’s only a noncompete agreement and no employment contract.

Possible arguments for breach of contract may include:

  1. Your employer failed to meet the obligations outlined in the agreement and/or contract. This argument may work if your employer failed to pay all compensation due to you, failed to fulfill your insurance requirements, or failed to meet some other obligation.
  2. Your work arrangement violates federal law. This argument may be valid if your agreement violates federal law, such as the Fair Labor Standards Act.
  3. Employer Doesn’t Have a Legitimate Business Interest to Protect

Since the burden is on your employer to prove that a noncompete argument is necessary to protect their legitimate business interest, this is the strongest area in which you could defeat your noncompete agreement.

You may argue that your agreement is overbroad, goes beyond your employer’s legitimate business interest, and prevents you from finding work in your field. Your employer would then have to prove their “legitimate business interest” is necessary and reasonable.

Legitimate business interests may include but are not limited to:

  • Trade secrets
  • Other valuable professional or confidential business information
  • Substantial relations with specific prospective or existing clients
  • Client associates with a specific geographic location, marketing, specialized training, or other business practices associated with the trademark.

The burden then shifts to you to prove that your employer’s business interest doesn’t need protection and the restrictions are overly broad.

Arguments that may help question legitimacy include:

  • You didn’t have access to trade secrets or other confidential information, or the information was already available to anyone in the industry or the public. Existing customer lists or unique sources are protected, but chamber of commerce directories are not.
  • You aren’t in the position to harm your employer’s goodwill if you were going to use it while working with a competitor.
  • You already had “extraordinary or specialized training” skills before you started working for your employer.
  • Everyone in the office, even the low-level position of receptionist, was required to sign a noncompete agreement.

A lot of employers make overbroad agreements or overreach their legitimate business interests by making everyone in the office sign a boilerplate noncompete agreement, which is an advantage to your case as an employee.

4. Employer Imposed Unreasonable Time Restriction

Florida statutes have both reasonable and unreasonable time restrictions for different types of restraints. Florida law requires a court to modify an unreasonable agreement to bring it within the bounds of reasonableness.

Former employee:

  • A time restriction is presumed reasonable if it’s less than six months.
  • A time restriction is presumed unreasonable if it’s more than two years.
  • If a restriction is longer than six months or less than two years, it will be analyzed by the court with the consideration of other factors surrounding the agreement.

Former distributor, dealer, franchisee, or licensee:

  • A time restriction is presumed reasonable if it’s one year or less.
  • A time restriction is presumed unreasonable if it’s more than three years.

Trade secrets:

  • A time restriction is presumed reasonable if it’s five years or less.
  • A time restriction is presumed unreasonable if it’s more than 20 years.

5. Employer Imposed Unreasonable Geographic Restriction  

Florida courts usually only enforce covenants that encompass the area where the former employee conducted business for the employer, and they decide on a case-by-case basis.

You can argue that you were restricted to working in a specific limited area. For example, you could argue that even though your former employer has an office in Palm Beach, where you now want to work, you conducted business for that employer only in Miami. 

  • A Florida court allowed the employer to use a radius of 50 miles from any of the defendant’s offices in which the former employee had worked.
  • A Florida appellate court agreed with the trial court’s ruling that prohibiting work in three counties was overbroad when the employee had worked within only one.

6. Employer Restricted Unreasonable Line of Business  

An employer cannot restrict or prohibit activities that a former employee never performed for their employer. For the noncompete provision to be upheld, the courts will look at whether the line of business in which you are engaged is reasonably related to the business of the former employer.

You can argue that you no longer continue business in the area or line of business that’s the subject of the action as your defense. 

For example, a court would most likely uphold a noncompete agreement if the former employee of an auto repair shop goes to work for another shop and works on the same kinds of vehicles. However, a court would mostly find that a prohibition is unreasonable if the former employee goes to work for a boat repair shop.

7. Employer Restriction Prevents Public Health or Safety From Being Served

This argument primarily applies to doctors, nurses, and people in specialized scientific and health areas. You can argue that because you’re specialized in a specific field, a noncompete that limits your geographic region to practice prevents public health or safety from being served.

Many employers use restrictive covenants since there are more mobile physicians now. For a restraint to be deemed lawful, employers must be able to demonstrate that the restrictive covenant is “reasonably necessary to protect the legitimate business interest.”

Physician employers typically are able to prove that the covenants are reasonably necessary to protect the legitimate business interest because of their investment in physician salaries, a steady flow of patients, and access to office space, facilities, and equipment.

However, Florida’s noncompete law has a new provision in Section 542.336 that states a “restrictive covenant” between an employer and a physician is void when “one entity employs or contracts with, either directly or through related or affiliated entities, all physicians who practice such specialty” in the same county. These noncompete agreements are also void for three years after the entry of a second employer into the same geographic market.

8. Customer Nonsolicitation Agreements 

Nonsolicitation agreements have the same requirements as noncompete agreements in Florida. For a former employee, this is one of the least successful arguments because Florida courts have allowed provisions to prohibit the solicitation of a former employer’s customers and don’t require geographical restraints for these provisions. 

Below are examples of reasonable nonsolicitation agreements:

  • The court found that a nonsolicitation provision was reasonable to the extent it restricts former employees from soliciting any of the employer’s customers and disclosing business information.
  • The court found that a nonsolicitation clause was reasonable because it was restricted to a two-year period, and the only prohibition included prospective customers whom former employees dealt with or obtained confidential information about through their association with the former employer.

Remedies for Employees

Depending on your case, there are different ways to try a noncompete agreement, including:

  • Obtaining a temporary or preliminary injunction
  • Obtaining a permanent injunction
  • Awarded monetary damages including unpaid wages and commissions
  • Filing a claim against a third party (such as a new employer)

As noted earlier, a party seeking a temporary injunction in Florida needs to prove: “(1) the likelihood of irreparable injury, (2) the unavailability of an adequate remedy at law, (3) substantial likelihood of success of the merits, and (4) that a temporary injunction will serve the public interest.”

If you seek a temporary injunction, you’ll be required to show that in the absence of its issuance you’ll suffer irreparable injury, and you must be able to prove the “substantial likelihood of success on the merits. The court would then constitute a contractual breach.

However, even if you can prove that the agreement was breached, there are often challenges as to irreparable harm and inadequate remedies at law.

Florida law § 542.335(1)(j) provides that “[t]he violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant.” The defendant will then have to rebut the presumption by establishing “ the absence of injury.”

The Florida Supreme Court has held that the normal remedy is to grant an injunction because it’s so difficult to determine exactly what damage is caused by the employee’s breach of the agreement.

Additionally, if you’re the prevailing party, Florida law may allow you to collect reasonable attorneys’ fees from the non-prevailing party.

Talk to a Business Attorney Today

An employment attorney can help you with the complex questions of preserving your business’s competitive edge or advocating for your rights as an employee.

If you need help enforcing or getting out of a noncompete agreement in Florida, contact Cueto Law Group today. Our business law attorneys are experienced in noncompete agreements as well as contract review and drafting, business litigation, breach of contract, partnership duties, IP theft, and much more.

Our law firm specializes in handling crisis situations. Whether it’s restraining potentially dangerous employees from starting a competing business, removing problem employees or owners from the workplace, or unfairly competing with other companies, you don’t have to go through it alone.

Give us a call or contact us online to see how we can help you.

The following two tabs change content below.

Cueto Law Group, P.L.

Based out of Miami, Cueto Law Group offers an extensive range of legal and business counsel to individuals, entrepreneurs, and corporations.

Latest posts by Cueto Law Group, P.L. (see all)

%d bloggers like this: