Are Non-Compete Agreements Enforceable?

Are Non-Compete Agreements Enforceable?

On Behalf of | May 26, 2013 | blog, Firm News

Are Non-compete agreements enforceable in Florida?

Whether you’re funding a “big idea” start-up or filling out the ranks of a growing business, you need to protect your company’s secrets, processes and services. How can you prevent future ex-employees from competing with you or working for competitors? It’s a challenge.

One option is to include so-called non-compete clauses in job contracts. These restrict an employee’s future work options. However, it can be tough to enforce such clauses, even when constructed carefully, and you can easily find yourself facing painful and costly litigation.

Two Key Elements in Non-Competes — Most solid non-compete agreements have two components:

  1. A provision that protects your company’s secret processes, systems, clients/customers and trade secrets.
  2. Constraints on where, when, and how your employees can work after leaving your firm.

Factors that govern whether a non-compete can be enforced:

  • State law. Different states have different rules. Some states, such as California, make it very hard for employers to enforce non-competes, while other states allow more restraints.
  • Whether the provision is “reasonable.” Courts have no desire to put ex-employees in unfair binds. So if your non-compete is unreasonable, the court may refuse to enforce it. Note — the court may either modify the restrictions to make it more “reasonable,” or, in extreme circumstances, reject it entirely. An “unreasonable” non-compete restriction might mean it:
    • Is overly broad, geographically;
    • Lasting longer than necessary;
    • Precluding the ex-employee from engaging in diverse types of work.
  • Scope, duration and applicability. Narrow the scope to protect your vital interests. For instance, it would be reasonable to prevent an ex-employee from soliciting and taking away long established clients of your business.
  • Clarity of the agreement. Make sure that the employee understands the purpose of the non-compete clause and what it protects. The employee should also receive some benefit — again, this goes back to the concept of “reasonableness.” The benefit could simply be continued employment with your company, or it could be an extra stipend for agreeing to forego competing.

Employment Law Contracts:

An Ounce of Prevention Is Worth a Pound of Cure As an entrepreneur or business owner, you operate in an environment that is, in many respects, uncertain. To minimize your risks, you need to anticipate potential problems. The Boy Scout motto had it right: “be prepared.” To protect the interests of your company, minimize risks for litigation, and improve your hiring process, get in touch with our employment law attorneys today. At Wilson McCoy, P.A., we’ll help you put together an enforceable employment contract.