Category: Non-Compete Agreements

Are non-compete agreements always enforceable?

Non-compete agreements are not always enforceable. Florida typically requires that all competition be allowed, and there shall be no restriction of competition, but there’s a separate statute in Florida, which is 542.335 Florida statutes that governs non-compete agreements. That statute requires that there be certain legitimate business interests of the employer set out in the statute such as for example, the protection of trade secrets or the protection of confidential information. The employer has to plead and prove these to be able to force a non-compete covenant.

WHAT IS A COVENANT NOT TO COMPETE?


A covenant not to compete is a promise not to compete. Any time the word covenant is used, covenant is simply a promise. A covenant not to compete is a contractual obligation or a promise not to compete against someone or a company. Typically, non-compete covenants occur in employment contexts where an employer wants to protect its employees from competing against the employer after they depart their employment. It also incurs in sales of businesses, where a business is sold and the buyer of the business wants to ensure that the seller doesn’t simply open up a competing business for it close by, which would defeat the entire purpose of buying the business.

What is a non-solicitation agreement?


A nonsolicitation agreement basically requires that the person signing it agree not to contact or solicit or obtain clients of another business or sometimes employees of that business. Typically, nonsolicitation agreements will occur either in the sale of a business, where the buyer of the business wants to ensure that it retains the clientele and the employees of the business it’s buying, or in employment relationships, where the employers wants to ensure that if an employee leaves his employment or her employment, that employee is not going to contact and obtain the customers or the employees with whom he used to work or she used to work.

What is a non-compete clause?


A non-compete clause is a provision in a contract where one party promises not to compete against another party in certain circumstances. For example, a party agrees not to open a competing business within a certain geographic limit, or possibly a non-solicitation provision is a part of the non-compete provision, not to hire certain employees of a previous employer or another business.

What is a trade secret and what are an employee’s obligations?


A trade secret is something that derives independent value because it’s not generally known. An employer wants to ensure that this trade secret is kept secret from its competitors, because it gets a competitive advantage by having this trade secret. An employee’s obligations are not to divulge that trade secret or to let it be known by others who could make use that would be harmful to the employer.

WHAT IS AN EMPLOYEE’S DUTY OF LOYALTY TO THE EMPLOYER?


Under Florida law and in many states, there is an obligation of a duty of loyalty by the employee to the employer. That means the employee cannot do acts that would be harmful to the interest of the employer. An example would be an employee who starts a competing business while still working for the employer. When that happens, there’s been a breach of the duty of loyalty, and the employer can sue the employee for lost profits and other damages.