Practical And Successful Solutions To
Business And Intellectual Property Legal Issues

What are the primary areas a restrictive covenant can cover?

On Behalf of | Oct 26, 2023 | Business And Commercial Law, Business Organizations |

Florida businesses want to keep a leg up on their competition. Part of that is having high-quality people working for them. Businesses that train and employ qualified individuals who are good at their jobs will do whatever they can to retain them.

However, it is natural for some workers to seek other opportunities. This is fine provided they keep the information they learned at their former workplace to themselves. To ensure a business is shielded, they frequently want employees to sign restrictive covenants. For both sides, it is important to know what is covered with these agreements and when they might nor might not be violated.

Understanding the law for restrictive covenants

Florida law allows for businesses to have non-compete agreements or non-disclosure agreements with employees if they choose to go elsewhere. It must be in writing to be enforceable and needs to be based on a legitimate business interest.

There are many reasons for which a restrictive covenant can be sought, but there are some that are more prominent than others. The agreement can cover trade secrets; confidential business information; relationships with customers or potential customers; goodwill between the business and its clients, customers or patients; and specialized or extraordinary training.

Trade secrets could be a formula, a program, an algorithm and just about anything that required intricate understanding. If a person is aware of a trade secret when leaving a business or has an idea as to how it is created, this could be dangerous to the prior employer and warrant a restrictive covenant.

The business itself will be run in a certain way. To prevent others from copying it too closely or knowing how it comes to its decisions, the agreement can dictate that the former employer cannot share what they know about inside operations.

Getting and maintaining customers requires strategies and each business might have its own methods toward doing so. This too can be protected via agreement. If the employee received training, this is a viable area for the former business to protect to keep other companies from mimicking how it prepares its employees.

Businesses need to protect their inside information

Competition is fine in business, but that does not mean companies should place their success and potential advancement at risk by leaving their inside secrets to chance. Having agreements with employees serves as a protective shield to prevent sensitive information from being shared. Knowing how to craft a restrictive covenant is a critical part of business law.