A Non-Compete Agreement restricts trade but also often provides the pursuit of a legitimate business interest. Indeed, no one likes it when your trade secrets are used against you. Such things can sour innovation and can demoralize the entrepreneurial spirit. To prevent such cases there are legal remedies in the form of Non-Compete agreements/clauses. These non compete agreement clauses are generally a part of the terms of the contract between a company and an individual or entity which is in a position to learn secrets of the company’s trade or access to the company’s customers which the company does not want an employee to take from them.
The Non-Compete Agreement Clause
Non-compete agreements are tailored to protect legitimate business interests. These business interests include but are not limited to trade secrets, confidential & sensitive information, information regarding clients, goodwill associated with the enterprise, unique or specialized training, etc
The Non-Compete agreement ensures that if in the event that the party or individual decides to part ways, they cannot enter into similar operations, be a part of an organization involved within the same or directly affecting line of business or be in any position which would allow it to unlawfully benefit from such information or secrets of trade.
Compliance with State Jurisdiction
Non – compete agreements are subject to the laws of the state jurisdiction which they fall under. For instance, all non – Compete clause sought to be enforced in the state of Florida are subject to the requirements stated in the Florida Statute 542.335. The statute states that
- The restrictive clause to be enforced should be in writing and duly undersigned by the individual or entity on which it is being enforced.
- It also has to be proved that the restriction within the non – compete agreement is necessary to safeguard legitimate interests of the business.
- The Statue also designates that two years in a reasonable length of time for such enforcement.
As a way of background, this particular Florida Statute was amended in 1999 where the legislature specifically took out the defense by employees that would bring into account the financial welfare of the employee and how the enforcement of the statute would ensure his personal and family demise. As the current law in Florida is written, the welfare of the employee is now irrelevant and the Judge will not consider it.
Despite such amendment, there are still many defenses to preventing a non compete from being enforced against an employee. Such as when there might be a restrictive covenant which binds the enforced party for a duration more than two years and does not involve trade secrets. 2 years of enforceability is deemed reasonable and hence the restriction can be legally bought down to 2 years or less.
The most common defense to enforcing a non compete clause or agreement in Florida is called the prior breach defense. This is when the non compete cannot be enforced by the employee if the employer did something wrong first, such as violating the employee’s civil rights, pay or another employment factor.
Employee Caveat Emptor Under a Non-Compete Agreement
When applying for any company the employees should also be aware of such a clause in their contracts. In case an employee overlooks such an agreement and after parting way with the employer starts a similar business, it can lead to heavy lawsuits. Hence it is necessary that the Employee beware of what the contract clause means and what restriction and covenants it would impose, as yes, under Florida Law, a Judge can force the former employee not to engage in the breaching practice even if it requires the employee to stop earning a living with a new, competing employer.
How Non-Compete Agreement Works
The Non-compete agreements help safeguard the merits of the employer by ensuring that the employer’s intellectual property cannot be used against him, hence preventing others from cannibalizing the fruits of his labor or taking customers or vendors, or going to work for a competing business.
This is done by preventing the Ex-Employee from engaging in a rival business or being a part of a competing business, thus making use of any trade secrets, or company information or the taking of customers or divulging business advantages learned from the former employer to be legally actionable against the employee. Enforcement includes causing the employee to stop the infringing damages as well as potentially, attorney fees, costs, and other injunctive or equitable remedies.