In contrast to many other states, the State of Florida has statutes that govern all aspects of covenant not to compete laws. The statutes in Florida are considered to be relatively liberal regarding upholding a covenant not to compete.
United States law, in general, however, typically does not favor restraints on trade and freedom. Some states specifically forbid these types of clauses.
For a covenant not to compete to be considered valid in Florida, several requirements must be met, including:
- Geographical limitation: The covenant not to compete must be reasonable in terms of distance from the employer. Florida laws provide that the area must be where the employer conducts its business;
- Time period: The covenant to compete cannot prohibit an employee from similar work for an unreasonable amount of time. Florida statutes place limitations of less than 6 months to be reasonable and more than 2 years to be unreasonable;
- Additionally, the court has the discretion to determine the reasonableness of time periods between 6 months and 2 years;
- Area of work: The field or area of work must be defined in a reasonably narrow way;
- In addition, a Florida covenant not to compete clause must protect certain legitimate business interests, which may include:
- Relationships with customers;
- Confidential information;
- Trade secrets.
The major difference in Florida’s non-compete laws is that the court is required to blue-line or cross out provisions of overly broad covenants not to compete in order to protect the interests of the employer. In contrast to other states, employers in Florida are entitled to an injunction that prohibits a former employee from working for a competitor, as well as monetary damages and attorney’s fees.
Because of these issues under Florida’s restrictive covenant laws, an employee should exercise caution before signing a covenant not to compete in the state. If an individual has any questions about covenants not to compete in Florida, they should consult with a local Florida attorney.
What Is a Covenant Not to Compete?
In general, a covenant not to compete means that employees will not go to work for their employer’s direct competitor when they leave. In some situations, employees will receive compensation for signing the agreement.
Businesses that most commonly include covenants not to compete are those that handle:
- Highly confidential materials;
- Client demographic or information databases that employees can access;
- Businesses with a direct competitor;
- Trade secrets; or
- Trademarks and copyrights.
Examples of common restrictions in covenant not-to-compete agreements may relate to:
- Time frame: After the employee leaves their former employer, the employee must refrain from working for the competitor for a certain period of time;
- This must be specified in the employment contract;
- Type of business: Working in certain industries and businesses that are generally related to that of the employer may be prohibited;
- Location: The employee may not be permitted to work for a competitor within a specified geographic location.
Covenants not to compete may be considered unreasonable when:
- It lasts for too long;
- The geographic area that it covers is too large;
- The types of business that it covers are too far-reaching;
- The employer does not have a legitimate business interest in enforcing the covenant not to compete.
What Is an Employment Contract?
Employment contracts are agreements that are formed between employers and employees regarding the employment arrangement that contains terms and provisions governing the employment relationship. One example of this is that an employment contract may provide that the employee will work for their employer for a specific number of hours in exchange for a yearly salary or hourly wage.
Employment contracts may also outline the benefits that will be provided, such as health insurance or paid time off. In order to be considered a valid employment contract, it must state the grounds for termination as well as the amount of notice each party has to provide in order to terminate the contract.
An employment contract may not be used in every employment situation. However, if the employment is not information, it is typically a good idea to have one.
An employment contract does not have to be written in order to be enforceable. However, it is best to have the contract in writing in case a dispute arises between the employer and the employee because the written document can be referred to.
Under Florida employment law, employment contracts become legally binding when specific requirements are met, including:
- Offer and acceptance: One party must make an offer to another party, and that offer must be accepted;
- Consideration: The two parties must agree to exchange something of value. In the context of employment, this typically means that the employer offers monetary value in exchange for the employee’s labor and expertise;
- Legality: The exchange that is defined in the contract must be legally enforceable; and
- Capacity: Both parties must be old enough and considered to be mentally fit enough in order to enter into a contract.
Some courts hold that employees must have time to contemplate the terms of the employment contract before signing the job. This means that it is not considered to be good practice for an employer to give the employee the contract on the first day of their job or after they begin working.
Similar to any type of contract, the agreement may not be signed as a result of:
One example of a type of employee who is likely to have a formal written agreement is a sales representative. Their contract may identify key accounts to which they will sell their employer’s products or services and other duties to attend training sessions and sales meetings.
The contract may also outline the salary as well as the commission that the sales representative will be paid, in addition to their sales goals. Once the employment contract has been entered into, it is binding on both the employer and the employee.
This means that if either of the parties fails to perform as promised in the contract, they can be held legally responsible in court.
What Happens if I Break a Non-Compete Agreement?
A party breaches an employment contract if they fail to do what they agreed to do under the contract or if they act in a manner that is prohibited by the contract. One example of this may be if a contract requires an employee to provide a 30-day notice if they plan to terminate their employment.
The employee may leave without providing a 30-day notice. If so, it will be considered to be a breach of contract, and the employee may be required to pay money damages to their employer as a result. Valid employment contracts may be enforced in court even though some contracts will specify a different process for resolving any disputes that are associated with the contract.
A contract may require the parties to participate in arbitration or mediation instead of going to court if one party claims a breach of the contract. If an individual or employer thinks their contract may have been breached, it is important to consult with an employment contract lawyer.
When an individual is reviewing or negotiating their employment contract, it is important to pay attention to the terms and conditions for the resolution of disputes or for claims of breach. Contracts may require that the parties forfeit important rights, for example, the right to a trial by jury.
Do I Need a Lawyer For Help With Florida Law On Covenants Not To Compete?
If you are considering signing an employment agreement, it is important to review your contract with a Florida employment contract lawyer. Your lawyer can also help you negotiate the contract’s terms if something is unsatisfactory.
If you are an employer, your lawyer can help you draft legal and valid employment agreements that are enforceable in court. Whether you are an employer or employee, your lawyer will represent you if any disputes arise related to your contract.