Non-solicitation and non-competition agreements offer valuable protection to employers to help ensure former employees do not use information they gained from the employer to benefit a competitor. However, since they potentially limit employment opportunities for employees, there are stringent requirements that must be met to be considered valid in Florida. You should always consult an attorney to determine whether your non-solicitation or non-competition agreement is enforceable in Florida before you give it to employees or you sign one as an employee.
What Is a Non-Competition Agreement?
A non-compete prohibits an employee from working for a competitor or starting a competitive business for some period of time and within a certain geographic area after employment ceases. Typically, they are used for employees who have access to confidential or proprietary information about the employer’s business or have unique skills, but some employers may use them more broadly.
When Is a Non-Compete Agreement Enforceable?
In Florida, agreements must be in writing and signed by the person against whom enforcement is sought. In addition, the party seeking enforcement must prove that the provision is:
- Necessary to protect the employer’s legitimate interests. These interests include (1) trade secrets; (2) valuable confidential information; (3) substantial relationships with specific prospective or existing customers, patients, or clients; (4) customer, patient, or client goodwill associated with an ongoing business or professional practice, a specific geographic location, or a specific marketing or trade area; and (5) extraordinary or specialized training.
- Reasonable in duration. What constitutes a reasonable duration depends on which of these four categories the agreement falls into:
- It restricts former employees, agents, and independent contractors. The presumption is that 6 months or less is reasonable and more than 2 years is unreasonable.
- It restricts former distributors, dealers, franchisees, or licensees of a trademark or service mark. The presumption is that 1 year or less is reasonable and more than 3 years is unreasonable.
- The noncompete is incident to the sale of a business. The presumption is that 3 years or less is reasonable and more than 7 years is unreasonable.
- The restrictions are predicated upon the protection of trade secrets. The presumption is that 5 years or less is reasonable and more than 10 years is unreasonable.
- Periods in between these are likely to be deemed reasonable, but the presumption does not apply.
- Reasonable in geographic scope. Generally, Florida will enforce an agreement that is limited to the same geographic area in which the former employee conducted business for the employer.
- Reasonable as to the line of business restricted. The non-compete should encompass the types of activities that the former employee performed for his or her employer.
Can a Non-Compete Be Partially Enforced?
Where a non-compete is overly broad, Florida courts take a “Blue Pencil” approach meaning they revise the provision to make it reasonable and enforceable. For example, the court may limit the duration or geographic area covered by the non-compete, rather than state that the agreement is unenforceable.
What Is a Non-Solicitation Agreement?
A non-solicitation agreement prevents an employee from soliciting customers or suppliers of the former employer. Its purpose is to limit the employee from using information garnered during employment to lure customers away and unfairly compete with the former employer. Often, they are used for employees in sales, account management, or executive roles.
When Is a Non-Solicitation Agreement Enforceable?
As with non-competes, non-solicitation agreements must be in writing and signed by the party against whom it is being enforced. The agreement must also be necessary to protect a legitimate interest of the employer and reasonable in duration and scope. For example, an agreement limited to solicitation of the former employer’s prospective or existing customers with whom the former employee dealt or about whom the former employee obtained confidential information would be reasonable in scope.
Unlike non-competes, a reasonable geographical limitation is not necessary for non-solicitation agreements.
What Should Employers and Employees Do?
Enforceability of non-competes and non-solicitation agreements are determined by courts by looking at the particular facts and circumstances. As such, it is important to get good legal representation. However, employers should be proactive and have an experienced attorney draft an agreement that is narrowly tailored to the specific needs of the business to help ensure that it is enforceable. Further, employers must take care to provide such agreements to those employees who are likely to have information that may be used against the employer rather than giving them to every employee.
Contact an experienced employment attorney for assistance with your non-compete or non-solicitation agreement.
