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Florida Employee Non-Compete Agreements: A Roadmap for Validity and Enforcement

Employee non-compete agreements are commonly used by Florida businesses of all sizes across many industries. It can either be a standalone agreement or a clause contained within an employment agreement. The purpose of an employment non-compete is to restrict an employee from engaging in a competing business while employed and for a specific duration within a geographic area after the employment relationship ends.

While Florida law generally disfavors this type of restraint, employee non-competes are allowed. However, to be valid and enforceable, the terms of the non-compete must satisfy Florida's technical legal requirements. This post breaks down what those are and what each means along with select sample cases to serve as illustrations, which together aim to serve as a general roadmap for validity and enforcement considerations when contemplating, drafting or reviewing an employee non-compete.

Technical Legal Requirements for Florida Employee Non-Compete Agreements

The legal requirements governing employee non-competition agreements are set out in Section 542.335 of the Florida Statutes. To be valid, an employee non-compete must be:

  1. In writing,

  2. Signed by the employee,

  3. Reasonably necessary to protect at least one legitimate business interest of the employer,

  4. Reasonable in time,

  5. Reasonable in area, and

  6. Reasonable in line of business.

If a non-compete is not in writing, signed by the employee, and not supported by at least one legitimate business interest, the non-compete is invalid and unenforceable. Fla. Stat. § 542.335(1)(a)-(b). See also NuVasive, Inc. v. Leduff, No. 2:19-cv-698-FTM-38NPM, 9 (M.D. Fla. Nov. 13, 2019) (stating time, area, and line of business requirements alone are insufficient to enforce a non-compete in the absence of showing the reasonableness of those restraints as reasonably necessary to protect identifiable legitimate business interests in need of protection).

Conversely, if a non-compete satisfies all six requirements, the court is required to enforce the non-compete and grant any appropriate and effective remedies, including, but not limited to, temporary and permanent injunctions. Fla. Stat. § 542.335(1)

Additionally, in cases where a non-compete is found unreasonable in either time, area, or line of business, but the employer has established at least one legitimate business interest, Florida law requires the court to cure this technical defect by modifying the unreasonable restraint to make it reasonable and enforce the non-compete. Fla. Stat. § 542.335(1)(c). The key takeaway here is that a technical defect in time, area or line of business does not render the non-compete unenforceable but, instead, subjects it to court modification.

What "Legitimate Business Interests" Mean

For an employee non-compete to be valid and enforceable, it must be supported by at least one legitimate business interest of the employer. If a non-compete is not supported by any legitimate business interest, it is unlawful, void and unenforceable. Fla. Stat. § 542.335(1)(b).

The types of business interests that are generally regarded as a “legitimate business interest” include:

  • Trade secrets as defined in Section 688.002(4) to mean: “information, including a formula, pattern, compilation, program, device, method, technique, or process that [] derives actual or potential independent economic value from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use []” that an employer, through reasonable efforts, maintains its secrecy.” (alterations added).

  • Valuable confidential business that does not qualify as a trade secret.

  • Valuable professional information that does not qualify as a trade secret.

  • Substantial relationships with specific prospective or existing customers, clients, or patients.

  • Customer, patient, or client goodwill associated with any of the following: (1) an ongoing business or professional practice, by way of trade name, trademark, service, or trade dress, (2) a specific geographic location, or (3) a specific marketing or trade area.

  • Extraordinary or specialized training provided by the employer. This means “training that goes beyond what is usual, regular, common, or customary in the industry in which an employee is employed ... [and not] skills that may be acquired by following the directions in the box or learned by a person of ordinary education by reading a manual….” Hapney v. Central Garage, Inc., 579 So.2d 127, 132 (Fla. 2d DCA 1991).

See Fla. Stat. § 542.335(1)(b).

The above list is not exhaustive. An employer may present business interests other than those listed that might qualify as a legitimate business interest warranting protection. In this respect, an employer must identify a business asset that is kept confidential, unique in the industry, derives economic value, and would give its competitors an unfair advantage if misappropriated and used by them. See White v. Mederi Caretenders Visiting Servs. Of Se. Fla., LLC, 226 So.3d 774, 784 (Fla. 2017) (a legitimate business interest means “an identifiable business asset that constitutes or represents an investment by the proponent of that restriction such that, if that asset were misappropriated by a competitor (i.e., taken without compensation), its use in competition against its former owner would be unfair competition.”); Colucci v. Kar Kare Automotive Group, Inc., 918 So.2d 431, 439 (Fla. 4th DCA 2006) (“Protectable information includes that which is unique in the industry and confidential.”) (citations omitted).

When presented with business interests beyond those listed in the statute, courts “examine the particular business plans, strategies, and relationships of a company” to determine if they qualify as a legitimate business interest. Infinity Home Care LLC v. Amedisys Holding, LLC, 180 So.3d 1060, 1065 (Fla. 4th DCA 2015). This task is “inherently a factual inquiry, which is heavily industry—and context-specific.” White v. Mederi Caretenders Visiting Servs. Of Se. Fla., LLC, 226 So.3d 774, 784 (Fla. 2017) (citations omitted).

For example, best practice policies, peer performance reports, information disclosed at operations review meetings, and customer databases containing idiosyncrasies, practices, preferences, and patterns of customers used for strategic marketing plans may qualify as legitimate business interests. See, e.g., Autonation, Inc. v. O’Brien, 347 F. Supp. 2d 1299, 1305 (S.D. Fla. 2004) (finding former employer’s highly specialized confidential business information of best practices policies, peer performance reports, and information disclosed at monthly operating review meetings as protectable legitimate business interests); Open Magn. Imag. v. Nieves-Garcia, 826 So.2d 415, 419 (Fla. 3d DCA 2002) (finding former employer’s physician database containing nature and idiosyncrasies of physician practices and information as to referral patterns, preferences, and type of insurance accepted and used as part of its confidential strategic marketing plan as protectable legitimate business interests).

The above example cases are insightful, but it's critical to highlight that a business interest found as a “legitimate business interest” in one case does not mean it is a legitimate business interest in all cases. E.g., White v. Mederi Caretenders Visiting Servs. Of Se. Fla., LLC, 226 So.3d 774, 786 no.4 (Fla. 2017) (noting an interest in referral sources may be a protectable legitimate business interest in some circumstances and unprotected in others, which highlights that the analysis of non-competes are context driven). The key takeaway here is that the burden will always fall on the employer to show why the business interest it seeks to guard qualifies as a legitimate business interest that warrants protection by use of a non-compete.

What "Reasonable in Time" Means

An employee non-compete agreement must specify a reasonable post-termination time restraint to be valid and enforceable. Time restrictions vary in length based on the employee's position, access to trade secrets and confidential and proprietary information, the nature and extent of that access, the nature and extent of the employee's working knowledge and influence within the company, the nature and extent of an employee's contacts with customers or clients (and as to health care providers, with patients), the type of information sought to be protected, and the industry.

Section 542.335(1)(d) of the Florida Statutes provides a general standard on reasonable and unreasonable time restraints for employee non-competes:

  • A time restraint of 6 months or less is presumed reasonable, and a time restraint of more than 2 years is presumed unreasonable for legitimate business interests that are not trade secrets.

  • For legitimate business interests that are trade secrets, a time restraint of 5 years or less is presumed reasonable, and a time restraint of more than 10 years is presumed unreasonable.

These statutory presumptions are rebuttable. This means an employee can refute the presumption of a reasonable time restraint by showing why it's unreasonable and, if successful, the burden will then shift to the employer to show why it's reasonable. E.g., Veterinary Orthopedic Implants, Inc. v. Haas, No. 3:20-cv-868-J-34MCR, 30 (M.D. Fla. Sep. 8, 2020) (finding former employer failed to produce evidence that warranted the presumption of reasonableness for the 2 year non-compete “based on the nature of confidential information at issue in this case or the way this particular industry operates.”). Similarly, an employer can rebut the presumption of an unreasonable time restraint by showing why it's reasonable. In this respect, “the higher in management and the more key or important the function performed by the employee the longer the time which could be justified for a no-competition covenant.” Dorminy v. Frank B. Hall Co., Inc., 464 So.2d 154, 158 (Fla. 5th DCA 1985).

In the end, if a time restraint is found overlong or otherwise not reasonably necessary to protect the employer’s established legitimate business interest or interests, the court will cure this defect by evaluating the facts to determine what is reasonable in time and then modify the duration to make it reasonable and enforce the non-compete.

What "Reasonable in Area" Means

For an employee non-compete to be valid, it should specify a reasonable territory that is off-limits post-termination. The restricted territory may be a number of miles, a city or cities, a county or counties, a state or states, or the entire United States. Overall, the off-limit area must be reasonably related to the territory covered by the employer’s business and to the employee's contacts in that territory to be reasonable. Accordingly, what is “reasonable in area” will vary by the specific facts of each case. See Office Depot, Inc. v. Babb, No. 20-cv-80407-SINGHAL (S.D. Fla. Mar. 19, 2020) (determining “whether a covenant not to compete is reasonable in terms of area is case-specific and fact-heavy.”) (citation omitted).

To determine what is "reasonable in area," courts consider facts such as, but not limited to, the employer’s business location, the territory in which the employer does business, any other territory that the employer’s business extends, and whether the former employee worked in or had sufficient contacts in the area sought to be restrained. See Open Magn. Imag. Inc. v. Nieves-Garcia, 826 So.2d 415 (Fla. 3d DCA 2002) (finding area of non-compete overbroad where the employee had only worked in Dade County but was barred from also working in Broward and Palm Beach Counties); Auto Club Affiliates, Inc. v. Donahey, 281 So.2d 239, 242-43 (Fla. 2d DCA 1973) (stating former employee with no or insufficient contacts in area where employer’s business extends or had not worked in the restricted area may be unreasonable) (citation omitted).

By way of illustration, the courts in the following sample cases found the restricted area specified in each of the employees’ respective non-compete agreements to be reasonable:

  • 20-mile radius: former employee restricted from working for any competitors located within 20 miles of her former employer’s office was reasonable. 4UOrtho, LLC v. Practice Partners, Inc., 18 So. 3d 41, 43 (Fla. 4th DCA 2009)

  • 50-mile radius: finding territorial limitation, restricting former auto dealership manager from competing within 50 miles of his former employer and within 10 miles of any other dealerships owned by his former employer anywhere in the United States, reasonable based on employer’s established legitimate business interests in confidential and proprietary information and specialized training. Autonation, Inc. v. O’Brien, 347 F. Supp. 2d 1299 (S.D. Fla. 2004)

  • 150-mile radius: former account manager of a nationwide business restricted from working for a competitor located within 150 miles of his former employer’s location within the 2 years prior to the end of his employment was reasonable given former employee’s exposure to confidential, proprietary and trade secret information, including, but not limited to, sales information, marketing strategy, and the identity and lists of actual and potential customers. Office Depot, Inc. v. Babb, No. 20-cv-80407-SINGHAL (S.D. Fla. Mar. 19, 2020)

  • Single County: former employees restricted from working for a competing pool service and maintenance company located in Pinellas County was reasonable based on former employer establishing it was located in, had serviced, and continued to service customers throughout that county. Pinch-A-Penny of Pinellas v. Chango, 557 So.2d 940 (Fla. 2d DCA 1990)

  • Nationwide: former employee restricted from working for a competing auto racing insurance business anywhere in the United States was reasonable given the former employer’s highly specialized field of insurance, the type of employment, and nationwide sales. Auto Club Affiliates, Inc. v. Donahey, 281 So.2d 239, 244 (Fla. 2d DCA 1973). See also Marshall v. Gore, 506 So.2d 91 (Fla. 2d DCA 1987) (former employee restricted from working for a company that developed and marketed computer software to dairy farmers located anywhere in the United States was reasonable based on evidence showing former employer sold 42 software programs to dairy farmers in 7 states and ran advertisements for its software in a nationwide dairy publication).

With respect to a global restriction, this is far more challenging to establish as a reasonably necessary restraint because it may deprive the employee from being able to work anywhere in the world using the skills upon which the employee depends to earn a living. E.g., Freedom Med., Inc. v. Sewpersaud, 469 F. Supp. 3d 1269, 1277 (M.D. Fla. 2020) (finding employer failed to establish any facts or legal precedent to warrant as reasonable a global restriction, prohibiting the former employee from working for a similar medical supply company anywhere in the world where former employee only worked in the Orlando area); Veterinary Orthopedic Implants, Inc. v. Haas, No. 3:20-cv-868-J-34MCR, 29 (M.D. Fla. Sep. 8, 2020) (finding a 2 year, worldwide, industry-wide prohibition on competition unreasonable based on the facts of the case); GPS Indus., LLC v. Lewis, 691 F. Supp. 2d 1327, 1336 (M.D. Fla. 2010) (finding global restriction in non-compete patently unreasonable and not reasonably necessary to protect any legitimate business interest of the former employer despite that it does business globally).

Even though challenging, a global restriction might, in rare cases, be reasonable where, for example, the nature of the legitimate business interests consists of trade secrets and other highly sensitive and unique proprietary information that undoubtedly derive an economic value, the employee held a top-level position with unfettered access to such information, and the employee is restricted from working from specified direct competitors and not from the entire industry. The takeaway here is if the facts and circumstances support a worldwide restriction as reasonably necessary to protect the company's established legitimate business interests, it might have a shot at passing court scrutiny.

Lastly, as is with time restraints, if a territorial restriction is found as overbroad or otherwise not reasonably necessary to protect at least one legitimate business interest, this technical defect will not cause the non-compete to become unenforceable. Instead, the court will cure this defect by evaluating the facts to determine a reasonable off-limits area and will then modify the area to make it reasonable and enforce the non-compete. E.g., Veterinary Orthopedic Implants, Inc. v. Haas, No. 3:20-cv-868-J-34MCR, 32 (M.D. Fla. Sep. 8, 2020) (reducing scope of global restriction to the continental United States and Australia based on evidence showing former employee engaged with customers in the United States and worked to develop former employer’s business in Australia but not in any other international regions); Carnahan v. Alexander Proudfoot Co., 581 So.2d 184, 186 (Fla. 4th DCA 1991) (reversing injunction as to overbroad area that restricted employee from competing in New Zealand and Australia as employer failed to show any evidence that New Zealand was part of employer’s geographic market, and instructing the trial court to modify the order to limit the geographic scope to only cover Australia); Orkin Exterminating Co. v. Girardeau, 301 So.2d 38 (Fla. 1st DCA 1974), cert. denied, 317 So.2d 75 (Fla. 1975) (affirming trial court’s finding that five county territorial restriction in former employee’s non-compete was unreasonable and its modification that reduced territory to a specific area within one city).

What "Reasonable in Line of Business" Means

For an employee non-compete to be valid, the non-compete must be reasonably related to the line of business (i.e., scope) of the employer. Basically, the employer must be engaged in the same or similar line of business that the non-compete seeks to protect. Fla. Stat. § 542.335(g)(2) (allowing courts to consider as a defense against enforcement of a non-compete evidence that the employer is no longer in the line of business it once was). See also Wolf v. Barrie, 858 So.2d 1083, 1085 (Fla. 2d DCA 2003) (if the “employer is not in [the same or] a like business, it has no legitimate interest in protecting against competition in that business.”) (alteration added) (citations omitted).

Final Remarks

Employee non-competition agreements are allowed in Florida, but not all non-competes are valid or enforceable as written. Non-competes can be a reasonable means to protect a company's legitimate business interests but they should avoid including any restraints that are overbroad, overlong, or not reasonably necessary to protect those interests.

Additionally, while technically defective non-competes can be cured by the court, this requires expending time and costs of litigation, which can be considerable. To help mitigate these potential losses, employers should consider the specific position, the employee’s level of exposure to confidential information and trade secrets, the employee’s level of influence within the company and over its operations, and the employee’s contacts with customers or clients (and with respect to health care providers, contacts with patients), along with any other facts and circumstances that would support the need for the restraints.

By employing a calculated approach that is narrowly tailored to the nature and extent of the employee’s position, the chances of the non-compete being deemed valid and enforceable as written may increase and the associated costs of any potential litigation may decrease.


 

The information provided in this post is for general informational purposes and not intended as legal advice or legal opinion for any individual matter. Keep in mind that legal developments or changes to law may occur in the future and, as such, the information contained in this post may not be the most up-to-date legal or other information. Do consult your own attorney for any legal advice you may require. If you do not have an attorney and would like to explore a potential engagement, please reach out to Venus Caruso using the contact submission form or by using the contact information provided in her bio.


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