Covenants Not to Compete

An employer with a business has much to lose if a dissident employee sets up a competing company. The employer could lose valuable trade secrets, confidential business information, or customer lists. In reaction to the threat employers went too far and required menial or low level employees to execute a covenant not to compete restricting their employment opportunities for a specified time and in a defined geographic area. The employee saddled with such a restrictive agreement could not find alternative employment.
The legislature attempted to level the playing field. Employers are entitled to enforce covenants not to compete in order to protect legitimate business interests. However, the covenant not to compete must be narrowly tailored to only protect legitimate business interests. 542.335 of the Florida Statutes provides that a non-compete can be enforced as long as: (1) an agreement is in writing; and (2) the employer is attempting to protect: (a) a trade secret; (b) valuable confidential business information; (c) substantial relationships with customers, patients or clients; or (d) extraordinary or specialized training invested in the employee.
Once the employer proves that it is attempting to protect a legitimate business interest the burden switches to the employee to claim that the restriction is overly broad or not reasonably tailored to protect the employers business.
An employer can seek to enjoin the employee from working in a competing company or starting his own company. Attorneys fees may also be awarded to the prevailing party. The statute is designed to stop unfair competition, not competition per se. The balance undertaken by the court is to protect businesses but at the same time not unreasonably interfere with an individuals right to work.
ABOUT THE AUTHOR: Houston E. Short
Houston Short grew up in the Central Florida area, and continues to reside in Orlando with his family. He provides representation in arbitration actions for the American Arbitration Association and engages in alternative dispute resolutions including mediation both binding and non-binding arbitration, and settlement negotiations. He is an active member of the American Arbitration Association Panel Review Committee, the Orange County Bar Association, and the Florida Bar. He graduated from Florida State University in 1984 with a bachelors of science degree (cum laude) and received his juris doctor from the University of Florida in 1987 (with honors). Houston co-authored, "The Constitutionality of the Legislatures Mandate to Sever Counterclaims in Mortgage Foreclosure Action," the Real Property, Probate and Trust Law Section, The Florida Bar.