• 11
  • August
    2010

Covenants Not to Compete have become far more difficult to enforce that in previous years.  In evaluating non-competition agreements, the most appropriate starting place is with the well-established public policy, recognized in the state of Florida as well as virtually every other state, that agreements in restraint of trade are void.  The statute that governs the exception to this rule, in Florida, is Section 542.335, Florida Statutes.  This statute, which specifically is directed as the exclusion to this general principal, which is embodied in non-competition agreements, provides a nonexclusive list of “legitimate business interests,” which now must be established before an employer may enforce a non-compete agreement.  This list includes: a) trade secrets (as defined in Section 688.002, Florida Statutes); b) valuable confidential business or professional information that otherwise does not qualify as trade secrets; c) substantial relationships with specific prospective or existing customer, patients, or clients; d) extraordinary or specialized training;  as well as f)  certain customer, patient, or client goodwill associated with an ongoing business or professional practice, a specific geographic location, or a specific marketing or trade area.

“Legitimate Business Interest”:  An Amorphous Definition

As can be determined from this list, the type of activity that would fall into the category of a legitimate business interest is broad and undefined.  In general, each case is unique, and can be determined based upon its own unique set of facts.  However, as a general rule, cases in Florida have defined protectable information as including that which is unique in the industry and confidential.  Thus, an employer cannot protect, by way of a non-compete agreement, information that is commonly known in the industry and not unique to the business.  Most importantly, courts will very rarely uphold non-compete agreements which have, as their sole purpose, a goal of preventing competition per se, or in preventing an employee from working for a competitor where there is no provable, legitimate business interest to be protected.  In that case, the general prohibition against contracts in restraint of trade will kick in, and such agreements, or such efforts, will be void as a matter of public policy. 

Confidential Information:  A Key Consideration

Thus, in an employer exposes an employee to confidential business information that is generally not known to the public at large, or the company’s competitors in particular, or if the company provides specialized and unique training to an individual, investing considerable resources in his or her training to bring his or her to a place that he or she otherwise would not have attained had it not been for the training, a legitimate business interest may be established that would be protectable and enforceable for a reasonable geographic area and for a reasonable time frame.  However, the courts will likely narrowly tailor the injunctive relief that may be obtained to make sure that only the legitimate business interest is protected.  Additionally, the employer should be ready to post a bond, in the event that a temporary injunction (the most common remedy) is granted.

Accordingly, even though non-compete agreements are not as easily enforced as in years past, they are still enforceable under the right circumstances.  However, the employer should be prepared for a tough battle to establish the criteria necessary to establish its right to injunctive relief: a legitimate business interest.