To generally be enforceable under Florida law, a non-compete agreement must meet the following three requirements. First, the agreement must be in writing and signed by the individual sought to be bound by it. Second, the agreement must set forth restrictions that are reasonable in scope—i.e., time, geographic area, and line of business. Finally, the non-compete agreement must be for the purpose of protecting one or more of a company’s “legitimate business interests.” A non-compete agreement that broadly prohibits competition per se is a violation of public policy and thus void. A strong non-compete agreement, therefore, is narrowly tailored to address these legal requirements.
Outside of making sure the agreement is in writing
and signed by the person to be bound, the most important consideration to be enforceable is whether the agreement is actually for the purpose of protecting a legitimate business interest. This is because a non-compete agreement that is unreasonable in scope (time, area, or line of business) may be “blue penciled” by a court in order to be reasonable in those respects and enforced against the party that signed it.
As provided by Section 542.335, Florida Statutes, “legitimate business interests” include, without limitation: (1) trade secrets; (2) valuable or confidential information that is not technically a trade secret; (3) substantial relationships with specific clients (whether existing or prospective); (4) goodwill associated with an ongoing business reputation, trademark, physical location, marketing
region, or other business practice; and (5) specialized training. Additionally, the Florida Supreme Court has ruled that business referral sources may also be deemed a legitimate business interest. To be effective in this regard, the employer should ensure that the non-compete agreement is tailored to address the specific aspects of the business that give it a competitive advantage, as those matters will often be deemed legitimate business interests.
A final consideration is for the agreement to set forth a restriction that is reasonable in time, area, and line of business. Section 542.335, Florida Statutes, addresses the time periods that are presumed reasonable in various contexts. For example, as to a former employee or independent contractor not associated with the sale of a business, a restriction against competition of
six months or less is presumed reasonable and a restriction of more than two years is presumed unreasonable. Upon sufficient evidence, however, courts have found a restriction longer than two years to be reasonable under the particular circumstances.
Like the legitimate-business-interest inquiry, whether the geographic area or line of business restrictions are reasonable is dependent on the specific facts of the situation. For example, a company that develops software specifically for flight control systems should not be able to enforce a broad restriction prohibiting an employee from working for any software development company. Rather, to be enforceable, the restriction should be narrowly tailored to prohibit working for a business that competes in the flight control system marketplace. Similarly, a construction
equipment sales representative with a Florida sales territory and Florida-based clients should not be prohibited from taking a similar job in California selling strictly to California companies. Instead, a more enforceable restriction would be to prohibit the sales representative from taking a job that specifically competes in the same Florida territory.
These are just a few of the issues to account for when drafting or seeking to enforce a non-compete agreement in Florida. And as with most legal matters, resolving such issues in order to obtain a successful outcome is generally a fact dependent inquiry. As such, if you need assistance drafting or resolving a dispute concerning a non-compete or similar type of agreement, it is highly recommended that you consult an experienced commercial attorney.