Non-competes are a tricky area of the law. Below is an
article I have written regarding non-competes in Florida.
While it sets forth general information, no two non-competes (and
their surrounding circumstances) are the same. Please feel
free to call me to discuss your particular non-compete.
Non-Compete Agreements – What You Should Know
Non-compete agreements can arise in a variety of circumstances:
employment relationships, stockholder agreements and in connection
with the sale of a business. The enforceability of the provision
will depend on a variety of circumstances, particularly the state
in which the restriction is to be enforced. Some states favor
non-competes, others do not. This article will only address
non-compete agreements under Florida law. If you live in a state
other than Florida, you should consult a local attorney in that
jurisdiction.
With certain exceptions, Florida law prohibits restraints on
trade. One of the exceptions is non-compete agreements that meet
the requirements of Florida Statute 542.335 (this governs
non-competes entered into after 1996 - Florida Statute 542.33
applies to non-competes entered into before then). These requirements
can be summarized as follows:
the non-compete must be reasonable in time, area, and line
of business
legitimate business interests must exist that justify the
restrictive covenant
the non-compete must be reasonably necessary to protect the
legitimate business interests.
The statute provides a non-exhaustive list of "legitimate
business interests". These include: trade secrets; confidential
business information, substantial relationships with specific
prospective or existing customers, and extraordinary or
specialized training. Typically, trade secrets and other
confidential information are claimed as the "legitimate business
interests."
After a legitimate business interest has been established, the
court will look at whether the non-compete is reasonably necessary
to protect the interest. This will depend on the facts and
circumstances of the individual case. However, much of the court’s
focus will be on: (1) the duration of the non-compete and (2) the
extent of the geographic limitation.
Florida’s statute provides some guidance as to whether the
duration is "presumptively" reasonable and unreasonable. For
instance, in the case of an employment non-compete – less than 6
months is presumptively reasonable and more than 2 years is
presumptively unreasonable. Anything in between may, or may not,
be reasonable, depending on the facts and circumstances.
Geographic limitations are a bit trickier since the statute
does not provide any guidance. A good rule of thumb is that a
court is unlikely to apply the non-compete to an area in which the
enforcing party does not do any business. For instance, if the
enforcing party doesn’t do business outside of Miami-Dade County,
a court would probably not enforce the non-compete covenant in
Hillsborough County (the Tampa area).
Even if the enforcing party manages to satisfies all of the
above requirements, a defendant may have other defenses available
to him, which will depend on the facts and circumstances of the
case. However, it is important to note that saying "I won’t be
able to feed my children if you enforce this non-compete" is NOT a
valid defense. The Florida statute specifically states that the
court must not consider any individualized economic or other
hardship that might be caused to the defendant.
Non-competes are being increasingly used in the commercial
arena. Whether they are enforceable will depend on a variety of
factors including their duration, geographic area and the state in
which they are to be enforced. If you wish to learn more, consult
an attorney in your jurisdiction who has experience in this area.
