Non-Compete Agreements: Are They Enforceable?
Are you thinking about entering a non-compete agreement with a company or an employee, or possibly already have one? If so, you should have several concerns that our attorneys at The Campbell Law Group, P.A. are well versed in assisting you prepare a non-compete agreement, as well as in determining whether your non-compete agreement is valid or enforceable.
What is a non-compete agreement? Fundamentally it is a contract that restricts or prohibits competition using “restrictive covenants” during or after a business relationship. In Florida, section 542.335, Florida Statutes 542.335, sets out the black-letter law on “covenants that restrict or prohibit competition.” This statute establishes the types of information that may be protected pursuant to a non-compete agreement, guidelines for the reasonable duration of restrictions based on the parties’ relationship, burdens of proof for the parties seeking and opposing enforcement, and general instructions on how such agreements are to be interpreted by the court. The basic premise of the statute is that covenants not to compete, although validated by statute, are not enforceable via injunction if the covenant is unreasonable, if enforcement would be contrary to the public health, safety, or welfare, or if the proponent is unable to show it has a legitimate business interest to protect and that the business will be irreparably harmed if the covenant were not enforced according to its terms.
Some generalities may apply across businesses but, to be truly effective, there is no “one-size-fits-all” non-compete agreement. An individualized evaluation into the unique features of a business is necessary to provide the most efficient protection and is, necessarily, a fact-intensive exercise. Accordingly, the general procedural and practical implications of an enforcement proceeding, as well as the trends that have developed from the interpretation and application of Florida’s statutory parameters, are discussed below to provide a framework for the creation of such an agreement.
For a non-compete agreement to be worth more than the paper on which it is written, the agreement must focus on what will be required to enforce its terms, both from a practical and a legal standpoint. A non-compete contract will likely be enforced as a valid restraint of trade or commerce if the contract is signed by the person against whom enforcement is sought and is reasonable in the following:
(1) Time refers to the duration or the overall length of time the contract restricts the actions of the contracting party;
(2) Area refers to the geographical limitations placed on the contracting party’s behavior; and
(3) line of business refers to the product(s) or service(s) that serve a particular customer transaction or business need.
Additionally, there are professions, such as medicine, dentistry, and law where clients may have more subjective discretion to choose whom they want to provide the required services. Notably, there are also changes that occur surrounding non-compete agreements as the law evolves. For example, as of June 25, 2019, when there is an entity such as a medical provider that employs all of the licensed physicians who practice a particular medical specialty (podiatrists, oncologists, etc.) within the county, the non-compete agreement will not be enforced and found to be invalid. The Florida Legislature reasoned that there is no legitimate business interest to support contracts like this and determined that such restrictive covenants restrict patient access to physicians and increase costs in these areas and are void and unenforceable under current law. The law was upheld by the U.S. District Court for the Northern District of Florida. See 21st Century Oncology, Inc. v. Moody, 402 F. Supp. 3d 1351 (N.D. Fla. 2019).
A proper non-compete agreement, created using factual, supportable evidence, provides the foundation for a strong position for enforcement from pre-suit negotiation to litigation. This is a highly complex and fact-intensive area of law and it recommended that you consult with an attorney regarding your specific situation. The attorneys at The Campbell Law Group PA are experienced in representing parties in these types of matters.
Our firm offers in-person and virtual consults, if you have any questions or concerns about non-compete agreements or any corporate, commercial, or employment matter, please feel free to call our office at 305-460-0145 or to schedule a consult here.