Agreements which restrict the ability of an employee to work in a particular field or in a certain area for a certain period of time are referred to as “Noncompete Agreements.” Section 542.335, Florida Statutes (“Valid Restraints of Trade or Commerce”) governs Noncompetes in Florida. Generally, a Noncompete in Florida must be in writing, signed, and justified by the need to protect some “legitimate business interest” such as trade secrets or client relationships. Often, but not always, the noncompete exists between an employer and employee and prohibits the employee from starting his or her own company or working for a competitor after his or her employment ends. In order to be enforceable as written, the Noncompete must not be “overbroad, overlong, or otherwise not reasonably necessary to protect a legitimate business interest.” In sum, the noncompete cannot last too long, prohibit a worker from competing in places far away from the employee’s former employer, or just function as a restraint on business without a legitimate reason. Litigation often arises from whether the noncompete lasts too long or covers too large of an area (although whether it actually protects a “legitimate business interest,” which I discuss below, could also cause concern.)
The law generally disfavors restraints on trade and competition (such as monopolies), but Florida enacted its Noncompete law (and prior versions) to be all-inclusive and cover most, if not all, contractual relationships restricting competition. Its goal was to balance an employer’s ability to protect his or her business from unfair competition by a former employee (such as the employee using specialized training to start a competing business) with the employee’s ability start his own business or change jobs.
As the New York Times reported, and as I have seen in our practice and among our business clients, the use of Noncompetes is on the rise. Noncompetes are now not exclusively entered into with senior level employees, but are also being used for low-paid and entry-level employees. Examples, as provided by The Times, include camp counselors, interns, and hair stylists. I recommend the above-article for a brief discussion of the various arguments regarding the scope of Noncompetes article and how legislatures across the country are addressing the recent rise in Noncompetes for lower level workers. The Florida legislature, does not appear to be considering any changes to the current noncompete statute.
The New York Times reported on the use of Noncompetes by Jimmy Johns, the popular sub sandwich chain that seems to have a store on every corner in Jacksonville. Jimmy Johns isn’t just requiring its regional managers or executives to sign Noncompetes upon hire; according to The Times, the person making your delicious sandwich was likely required to sign a Noncompete. While the article points out the noncompetes have not yet been challenged in court, I find it unlikely a Florida court would uphold a noncompete signed by a sandwich maker. In Florida, the employer must prove a “legitimate business interest justifying” the noncompete. The employer would have a difficult time proving a “legitimate business interest” such as a protection of a trade secret (although I would be interested in how a potential disclosure of their bread recipe and its baking process would be litigated from a trade secret prospective), and it would be difficult to convince a court of a sandwich maker’s “substantial relationships” with customers or his or her receipt of “extraordinary or specialized” sandwich making training which needs protection.
However, my take away from the recent boom of noncompetes is that businesses need to be aware of their ability to protect their interests in creative ways that don’t just involve high level executives, and employees and entrepreneurs need to be aware that in the current market, there is a good chance they will be required to sign some form of noncompete upon hire. However, employees and entrepreneurs should also understand that just because they signed a noncompete, it doesn’t always mean it is valid and enforceable should they disregard its terms. As always, all contracts are different and only an experienced Florida attorney can advise you on the issues surround a specific noncompete.