Each new contract provides an organization with an opportunity to protect itself and limit operational disruptions. Contracts with employees, independent contractors and even business partners can include various protective clauses.
Restrictive covenants are popular additions to contracts. They help limit the likelihood of someone with access to trade secrets and information about business operations from using that information for the benefit of a competitor or start their own company. Non-compete agreements are common in modern employment contracts.
Businesses often try to prevent workers from starting a competing business nearby or going to work for a direct competitor after learning about how the company operates. Non-compete agreements have been subject to a lot of scrutiny and criticism in recent years. The Federal Trade Commission (FTC) even published a new rule prohibiting such agreements. Despite the new rule, can businesses still enforce restrictive covenants in Florida?
Non-competes are still enforceable in Florida
Contrary to what people might assume, non-compete agreements are still technically enforceable in Florida. The state has never banned them outright, only regulated their use. The FTC’s Final Rule never actually took effect.
Instead, multiple federal judges have ruled in response to civil lawsuits that the FTC overstepped its authority by implementing that rule in the first place. One of those court cases was actually filed with the federal courts right here in Florida. Judges have established that businesses still have the theoretical right to enforce non-compete agreements.
However, to be enforceable, agreements have to adhere to the best practices and the restrictions outlined in state law. For example, the worker typically needs to have received something of valuable consideration, such as a job offer, in return for agreeing to the non-compete terms. Typically, the agreement can only persist for a certain amount of time to be valid and enforceable.
The courts enforce the agreement by issuing an injunction prohibiting certain economic activity. They can also award damages if employers can prove that unfair competition harm the business. Finally, civil court judges can potentially enforce penalty clauses that may entitle employers to a certain amount of compensation for violations of the non-compete agreement.
Documenting alleged violations and reviewing contracts are both key steps for enforcing a non-compete agreement that is included in a worker’s employment contract. Business owners and executives may need help determining if they have grounds to take their case to court and what legal remedies they should request.