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Enforceability of Non-compete Provisions

Orlando Business Lawyer Helps Clients Across Central Florida with Non-compete Agreements

Florida Statutes §542.335 governs the treatment of certain agreements entered into after July 1, 1996 that “restrict or prohibit competition” in the same or similar industry.  These agreements, also known as ‘restrictive covenants' or ‘non-compete agreements' are commonly favored by employers who wish to limit their current and former employees from engaging in acts that they consider to be in competition or conflict with their own business interests. The enforceability of non-compete agreements can be challenging because it involves balancing the public interest of promoting healthy competition with protecting business's confidential business information, good will, and trade secrets.  While the treatment of these provisions varies significantly between jurisdictions, there are certain factors that are routinely at the focal point of consideration in many states. In Florida, the measure of these deciding factors, as articulated under §542.335(1), requires that such restrictions be “reasonable in time, area and line of business” in order to have a potential of enforceability. Id. However, the determination of what is considered to be ‘reasonable' remains largely a question of fact to be decided on a case-by-case basis. While the statute provides some guidance as to what constitutes “reasonableness in time,” it does so by differentiating based on involvement of a trade secret and the type of relationship with the party against whom enforcement is sought. See §542.335(d) & (e), Fla. Stat.

Orlando Non-compete Agreement AttorneyAdditionally, there are other requirements that must be met before a non-compete agreement agreement can be enforced. For instance, while a court cannot consider the “individualized economic or other hardship” of the alleged violator, if the enforcing party is no longer in business, the court may (in addition to public policy and “other… legal and equitable defenses”) consider it to be a viable defense to the restriction. §542.335(g), Fla. Stat. As to the consideration of public policy, the statue requires that it “substantially outweigh the need to protect” the interests sought. §542.335(i), Fla. Stat.

Another requirement to enforce a non-compete agreement involves the need to “plead and prove that the contractually specified restraint is reasonably necessary to protect the legitimate business interest[s] … justifying the restriction.” §542.335(b), Fla. Stat. Thus, taken as a whole, the enforcing party must not only “plead and prove” the existence of a “legitimate business interest,” it must also establish that the provision is “reasonable” and “reasonably necessary” to guard against the alleged harm. Id.  Unlike the greater ambiguity associated with the word “reasonable,” Section 542.335(b) provides a non-exclusive list of specific matters of interest falling within the term “legitimate business interest.” Some of these include but are not limited to: trade secrets, customers, confidential business information, goodwill, trademark, geographic location, marketing area and certain types of specialized training. Id. If the court does find the restriction to be unenforceable, because it is unreasonable or unnecessary, §542.335(c), Fla. Stat., requires that it “modify the restraint and grant only the relief reasonably necessary to protect such interest or interests.” Therefore, because the court may tailor the restriction to provide a “reasonable protection,” it is dangerous for a party, or his or her attorney, to automatically assume that a restriction will be held null and void. §542.335(h), Fla. Stat. It should be noted however that pursuant to Section 542.335(b), if a restriction is not backed by a “legitimate business interest,” the statute requires the courts to consider it “void and unenforceable.”

If it is found that an enforceable restriction has in fact been violated, the enforcing party shall be entitled to a “presumption of irreparable injury,” which means enforcement against the violator may include, among other remedies, a temporary or a permanent injunction. §542.335(j), Fla. Stat. While there are other requirements to be considered, it is important for a business attorney to review your situation and advise you based on the specific and unique facts of your case.  Your Florida business attorney should also be mindful that pursuant to §542.335(k), Fla. Stat., courts may award attorney's fees even if there is no provision in the agreement entitling the same to the prevailing party. Thus, whether you are enforcing such a non-compete agreement, defending against such an agreement or are in the process of crafting one, a business attorney in central Florida can provide you the guidance needed to save you time, money and frustration that you and your business deserve.

"To read the text of the actual Florida Statute, please see http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0500-0599/0542/Sections/0542.335.html."

Contact our Central Florida Business Lawyer in Orlando

If you are enforcing a non-compete agreement, defending against one or are in the process of crafting one contact our Orlando and Tampa Business attorney for a free consultation. You may call us at (407) 205-2330 or fill out our online form provided at the top of this page and we will contact you shortly. We value your privacy and will keep any information strictly confidential.

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