What Is A Non-Compete Agreement?
There are two basic groups when you talk about a restriction of trade under the Florida statutes and under the case law that exists in the state of Florida. The first is where you have non-competes between an employer and an employee and the second group is restrictions such as trademarks or intellectual secrets and those types of things when you work for a company. So you would like to make sure that your intellectual property doesn’t get distributed to other companies via a prior or former employee. In the case of non-compete you are dealing with employer-employee relationship and basically what you are saying is that the employer is taking the time and the money and the effort to train the employee and to give resources to keep the employee trained.
In that particular instance, the employer has the right to protect the employee from learning all of that business and also to having a business connection that he or she would not have had if not for the employer. Take, for example, an HOA or a condo where you typically have a property management company. The property management company will put an agent that will manage the property. So the agent works for the property management company and all of a sudden the association goes to the particular agent who is running the association and says I paid this property management company a lot of money. Why don’t I just fire you myself or you go work for a cheaper property management company? The property management company made the deal with the association in the first place and the agent never would have been there without the property management company.
So the property management company has an interest in protecting that. So what a non-compete does is it limits by duration and by geographical scope and also by the scope of the type of work involved and based upon that it limits the employee from going and doing work that would be in competition with their former employer. So whether or not they do that on their own or whether or not they go to work for another company that does the same kind of work, then the employer if they have a non-compete can enforce that and get an injunction against him or her. There is also the possibility of getting monetary damages although those are liquidated damages in the non-compete contract or whether they are actual compensatory damages that the employer can prove.
Also too, the company that hires somebody with a non-compete has exposure to what’s called tortuous interference with a contract when there is a contractual relationship keeping that employee from working in the same kind of industry for another employer that does the same kind of work. So if they hire someone knowing they have a non-compete, they also have some exposure to a possible lawsuit and possible damages based on a non-compete.
How Long Are Non-Compete Agreements Typically Valid For?
There is actually a Florida statute that talks about the presumption and presumptions are persuasive to judges and juries but they don’t always necessarily mean that whatever presumption is there is what the ultimate decision is going to be. So if you talk about a non-compete, in Florida statute, anything that is under 6 months in duration is presumed to be enforceable. Anything over two years is presumed to be unenforceable. So if you have the non-compete below 6 months, you are probably not going to lose if the non-compete is challenged. Based on the duration of the non-compete, if it’s over two years in length then the presumption is going to be against you and you may very well lose that unless you have other facts to suggest why it would be reasonable to have a non-compete for over two years for an employee and an employer relationship.
The question arises what about the area between 6 months and 2 years? There is no presumption one way or the other so what that means is typically speaking, those would be enforceable. So there is no presumption one way or the other. So if the non-compete is adequate and in compliance with the Florida statutes with regard to scope then that duration probably will be okay. So I would say that most of the ones you see, most of the ones that are drafted by attorneys understand that you are pretty safe with two years. Anything over two years is kind of stepping into dangerous grounds. I would say two years or less is a reasonable standard.
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