Non-competition agreements, also known as covenants not to compete or restrictive covenants, are employment contracts used by employers to limit the ability of an employee to compete with the employer by stealing customers or trade secrets. Enforceable agreements must strike a balance between protecting the employer's legitimate business interests from an unfair competitive advantage with the employee's right to work in a field for which he or she is trained. In general, courts decide what is considered reasonable or not reasonable by examining the type and size of the business, how long and over what geographic area the restrictions apply and whether adequate consideration, or benefit, was given the employee at the time the agreement was signed.
The Law In Florida
The Florida statute on non-competition agreements sets out presumptively reasonable and unreasonable time restrictions for different types of restraints. This means that, in the case of a former employee, that a restriction of less than 6 months is presumed reasonable and a restriction of more than 2 years is presumed unreasonable. Any restriction longer than 6 months or less than 2 years will be analyzed by the court, taking into account other factors surrounding the agreement. The statute also sets out reasonable and unreasonable presumption in the following situations:
The statute also requires a court to modify an unreasonable agreement to bring it within the bounds of reasonableness.
- In the case of a former distributor, dealer, franchisee or licensee, 1 year or less is reasonable; more than 3 years is unreasonable.
- When trade secrets are the subject of an agreement, 5 years or less is reasonable; more than 20 years is unreasonable.