A Business-Minded Approach To Employment Law

Employers Reminded That Non-Compete Agreements Must Be Reasonable To Be Enforceable

On Behalf of | Mar 6, 2018 | Employment Contracts |

Non-compete agreements are standard practice in many businesses, but they may not provide as much protection as you think. In Florida, these agreements are usually only enforceable if they are considered reasonable in terms of the time period and geographical location covered, and the business has a statutorily protected legitimate business interest.

Despite efforts to meet these requirements, employers may be surprised to find that court rulings almost always favor the employees. The courts are generally hesitant to enforce contracts that limit an employee’s right to seek alternate employment, particularly if they are not using the protected business interest in a way that creates unfair competition.

Defining Protected Business Interests in Florida

Florida Statute 542.335 states that non-compete or non-solicitation agreements are only enforceable if they protect a legitimate business interest. This definition includes, but is not limited to:

  • Trade secrets
  • Valuable confidential professional Information
  • Valuable confidential business information
  • Specialized or extraordinary training
  • Substantial relationships and/or goodwill with specific parties valuable to the business

In cases where employers cannot prove a legitimate business interest, the contract is considered unlawful and is immediately voided.

Recent Court Ruling Brings Further Clarification

The case of White v. Mederi Caretenders Visiting Services of Southeast Florida recently put the concept of legitimate business interest to the test. Visiting Services of Southeast Florida, a home health agency, used marketing representatives to develop close working relationships with hospitals, nursing facilities, and physicians. The rapport and goodwill were intended to encourage future patient referrals to the agency. The company argued that this created a protected legitimate business interest sufficient to enforce non-compete agreements with the employees who hold this position.

After hearing the case, the Florida Supreme Court sided with the company, ruling that the agreement was, in fact, enforceable. Most importantly, they provided a reminder that the list of protectable business interests stated in the law is not exhaustive. Other interests may arise that are sufficient to enforce a non-compete or non-solicitation agreement.

The courts clarified, however, that to prove a protected legitimate business interest would require a detailed factual inquiry. Each decision will be made based on the specific industry and context under which the supposed interest arises.

Takeaway for Florida Employers

While this ruling may bring relief to some Florida employers, there is no guarantee that your non-compete or non-solicitation agreement will be deemed enforceable. Creating a positive work environment and offering competitive employee retention programs may be far more effective than relying on these agreements.

You can also protect yourself by keeping critical business information under wraps whenever possible. Enforce a need-to-know policy when it comes to confidential trade secrets, customer contact lists, and other valuable information. If you do use non-compete agreements in your business, have them periodically reviewed by a qualified attorney to help ensure that they continue to meet enforceability standards.