Non-compete Agreements: Form, Definition, And Enforceability
By: Christian C. Walters, Esq. of Barry L. Miller, P.A., Offices Orlando.
Nearly everyone is familiar with non-compete agreements. By definition, non-compete agreements place a restraint on the legal ability of another to engage in a trade or profession which competes with a former employer, contractor, or other business affiliation. Under Florida’s Antitrust Act of 1980—§ 542.335, Fla. Stat.—non-compete agreements are enforceable provided that such agreements are “reasonable in time, area, and line of business,” and protect a legitimate business interest of the party seeking to enforce the agreement. Id.;see also, Gould & Lamb, LLC v. D’Alusio, 949 So. 2d 1212 (Fla. 2d DCA 2007).
The legitimate business interest requirement protects the public interest by refraining from enforcing agreements which unduly burden another from engaging in a trade or profession without sufficient justification. That is to say, without enforcing the non-compete agreement, the party trying to enforce it would face a particular harm. Legitimate business interests articulated by Florida courts include, without limitation, the following:
- Protecting trade secrets from disclosure
- Protecting confidential business information from disclosure
- Protecting client, customer, vendor or patient information from disclosure.
- Protecting substantial customer relationships.
- Protecting customer, patient, or client goodwill associated with:
- A specific geographic area
- A specific marketing or trade area
Typically, in any lawsuit, the party bringing the lawsuit has the burden of proving their case. In a suit to enforce a non-compete, the party bringing the action has the burden of providing a legitimate business interest justifying the enforcement of the non-compete; however, once the party establishes that business interest, the party opposing the enforcement of the non-compete has the burden of proving that the non-compete is too overbroad, overlong, or not necessary to protect the business interest alleged.
The restriction must also be reasonable in term. That is to say, the restriction must be no longer than necessary to protect the legitimate business interest, and must not be so geographically large so as to restrict someone from a trade entirely without justification. For example, if a local flower shop hires an employee and enters into a non-compete agreement providing for non-competition after termination for 6 months. That term will likely be found reasonable. However, if the agreement provides that the employee cannot work as a florist anywhere in the United States, that restriction is likely unenforceable as the flower shop has no legitimate business interest in ensuring the employee doesn’t compete in an area where the flower shop maintains no business presence. In the event that the non-compete is, in fact, too long or too widespread to justify following the non-compete agreement, the court will still enforce the agreement, but will narrow its terms to a lesser time or smaller geographic area, respectively.
Review of the enforcement of non-compete agreements requires complex legal analysis to determine its validity and enforceability. The attorneys at Barry L. Miller, P.A. can assist you in reviewing these agreements. Please contact us at 407-423-1700, or by email at [email protected] to schedule a consultation!