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John C. Hamlin, P.A.

 

 

1580 Sawgrass Corporate Parkway

Suite 130

Sunrise, FL 33323
E -mail: john.ham
lin@flacorplaw.com Phone: (954) 315-4580
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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.

     

     
     
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