The possibilities and limits of a non-compete agreement

The possibilities and limits of a non-compete agreement

On Behalf of | Apr 13, 2022 | Uncategorized |

The underlying purpose of a non-compete agreement is to protect an organization from unfair competition. Depending on the wording or scope of the clause, this can pose such limits on former associates as:

  • Not working for a competitor.
  • Not starting a business that attracts the company’s clients.
  • Not soliciting a business’s clients.
  • Not sharing trade secrets, trademarks, or inventions with a competitor.

Florida businesses must be able to protect their IP or classified information to remain competitive in today’s world. Unfortunately, even though a non-compete clause is often a standard part of an employment contract, it can become a source of dispute when an employee challenges its restrictions or enforceability. Tampa-area business owners should know how to protect their interests when this happens and find out their legal options.

Necessary elements of a valid non-compete agreement

For a non-compete agreement to stand up in court, it must follow the requirements outlined by state law. Most states allow non-competes that demand reasonable restrictions, however, when disputes do arise, it is often because of poorly worded documents that are misunderstood or are otherwise unenforceable.

For a non-compete to be valid it must have certain elements:

  • An offer of consideration at the time of signing.
  • A legitimate business interest in need of protection.
  • A reasonable framework in scope, geography and time.

Often, the offer of employment itself is the consideration in exchange for the prospective employee’s agreement to not compete. If the employee signs such an agreement after employment has begun, however, to be valid the offer of consideration must be an additional bonus, such as a promotion or pay raise.

Showing reasonableness in enforcement

Under Florida law, the court cannot enforce a restrictive covenant if it is not in writing and signed by the employee or restricted entity, and the written document must identify at least one legitimate business in need of protection. Valid business interests are identified as:

  • Trade secrets
  • Confidential interests
  • Client of the business
  • The geographic location
  • Received training

When enforcing a non-compete, a company must not seek to overreach its enforceability. It  must show that the agreement is reasonably essential to protecting its business interests, that the geographic scope is restricted to the extent of business’s reach, and that the enforcement period is within the bounds of the statute’s presumptions regarding the type of business, former employee or agent, distributor, franchise, or seller.