By: Santiago J. Padilla, Esq.
An agreement not to compete, otherwise known as a non-compete agreement, is an agreement whereby an employee agrees not to enter into or start a similar profession or trade in competition against his or her employer. Non-compete agreements are most often required for new employees before beginning work and usually take effect after the employer-employee relationship has ended.
In order for a non-compete agreement to be considered valid by a court, the agreement must meet several requirements. A non-compete agreement must be supported by consideration when it is signed. Essentially, it means that an employer cannot ask an employee to sign the non-compete agreement without giving the employee something in return. For a new employee, it is enough for the employer to give the employee a job in exchange for signing the agreement. However, for an existing employee, the employer may need to offer some incentive to sign the agreement, like a bonus or extra vacation days. However, some courts have held that the continuation of employment is sufficient consideration.
A non-compete agreement must also protect a legitimate business interest of the employer. An employer may not simply require a non-competie agreement for any reason at all. For example, a non-compete agreement can be used to protect the goodwill developed by an employer in terms of customer relations, or to protect its confidential information. Trade secrets can be particularly difficult, because the employer must show that it took reasonable measures to keep the information secret and that the information gives the employer a competitive advantage.
Finally, a non-compete agreement must be reasonable. When reviewing the agreement, a court will balance the needs of the employer against the burden that the agreement places on the employee. A non-compete agreement must be reasonable in duration. In other words, the length of time where an employee is forbidden from competing with his or her former employer must not be too lengthy. For example, if the non-compete agreement is designed to protect confidential information, the length of the agreement should not be any longer than the time for which the information remains valuable to the employer. Under Florida law, a non-compete agreement with a duration of more than 2 years is considered unreasonable.
In addition, the geographical area that the agreement covers must be reasonable as well. An appropriate geographical area for an agreement is based upon the services provided by the employee, and the importance of the services to the employer's business. For example, if the employee is a salesman the geographical area in which he or she is forbidden from working will be smaller than the geographic area for a senior sales manager.
Determining whether a non-compete agreement is valid depends on many very specific facts, and will depend greatly on the circumstances of the case. An experienced attorney can review the specific circumstances of your case, and explain how your agreement is valid under Florida law.
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If you have any questions regarding the wording or enforceability of a non-compete agreement, contact Santiago J. Padilla, Esq. as soon as possible. Based in Miami, Florida, we represent employers and employees throughout South Florida in employment cases. To set up an initial consultation, you can contact us through the Internet or call us at (800) 483-7197.