What is a non-compete agreement ?
A non-compete agreement is a provision that usually appears in an employment contract between an employee and an employer. In basic terms, a non-compete clause requires an employee, in exchange for being hired, to give up his or her rights to go to work for a competing business or company for a given period of time after the employee leaves his or her current job. Non-compete clauses can serve a valuable purpose in many businesses and industries. No business wants to hire an employee who learns all of the company’s methods and practices, develops relationships with all of the company’s key customers, and then quits to go to work for a competitor across the street.
On the other hand, non-compete clauses can be abused by employers. Most employees have very little negotiating power at the time they are hired, and they have no choice but to agree to the non-compete clause if they want the job. Later, when the job does not go well, the employee discovers that he or she may need to move out of town to find another job in the same industry or field. This is why non-compete clauses often lead to lawsuits.
Non-compete clauses are governed by Florida statute, and they are not always enforceable. To be enforceable, a non-compete clause must meet two tests.
First, the employer must have a legitimate business interest in enforcing the non-compete agreement. Typical examples might include protecting existing customer relationships or protecting business trade secrets or confidential information.
Second, the non-compete agreement must be reasonable in duration and scope. Duration means the amount of time that it covers, i.e., one year, five years, etc. Scope means the geographic area that it covers, i.e., the city, the county, the whole state, etc. Whether a given non-compete agreement passes this two-part test will depend on the specific facts and circumstance of the business and industry.
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