Non-compete agreements, which are sometimes referred to as “restrictive covenants,” are highly debated and, sometimes, hotly contested (in court). Many states (like California) take the position that they are unfair to rank-and-file employees, while other jurisdictions (such as Florida) contend they are necessary for providing small businesses a fair shake in free enterprise.
Even though Florida is rather friendly to employers when it comes to recognizing and enforcing non-compete agreements, there are still several requirements companies must meet to have valid agreements. In this blog, we’ll cover how to effectively craft a non-compete agreement and go over some things to avoid.
Should You Use Non-Compete Agreements for Every Employee?
It partially depends on the size and nature of your business, but, generally, you should not have a blanket non-compete agreement that every new hire signs. You should, however, use smartly crafted agreements for certain high-level employees who have direct access to your legitimate business interests. A legitimate business interest could be a trade secret or other information that is central to your business and its viability in the marketplace.
How Long Can Non-Compete Agreements Last?
These agreements can be in effect during and after someone’s employment with your company. Generally, non-compete agreements in Florida must last for a “reasonable” amount of time. This can last for six months to as long as two years. There is no set timelines to which these agreements must adhere, so the courts determine reasonableness on a case-by-case basis. Therefore, you should not apply an especially long horizon for your non-compete agreements.
You Need to Explicitly Identify Your Legitimate Business Interests
Make sure that you are not drawing up overly broad or vague non-compete agreements. In court, the burden of proof is on employers to prove that the business interests identified in the agreement are legitimate. To receive protection for your legitimate business interests, you generally should not allow every employee access to this information. Additionally, the legitimate business interests you identify should narrowly pertain to your company’s industry.
Other Do’s and Don’ts Of Non-Compete Agreements
Some other pieces of advice to consider with your non-compete agreements:
- Don’t make the agreement apply to territories in which you do not conduct business.
- Do put the agreement in writing. This is generally a requirement in Florida.
- There is not a requirement in Florida for employers to consider the potential economic hardship imposed by a non-compete agreement on an employee. However, other states (including states more conservative than California) do not share this approach. So, if you want the agreement to be recognized in other states, don’t rely on DIY contracts or algorithm-driven legal services to craft your non-compete agreements.
Trembly Law Firm understands the genuine concerns of small business owners, including the potential for ex-employees to simply gather information and contacts at a company for the sole purpose of starting their own enterprise. You need to be smart about the way you go about protecting your business interests through non-compete agreements, though. We’d love to help out; call us at 305-985-4581 to speak with a member of our team.