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The Importance of Non-Compete Agreements And How to Make Them Reasonable in Scope

Business owners work hard to build a successful company and deliver quality products and/or services. An important step in achieving that objective is a “non-compete agreement” that is reasonable in scope so that it is valid under Florida law. This allows business owners to attract talented employees without fear that such employees will use the information and experience they gain during their employment in direct competition with the employer.

What is a non-compete agreement?

A non-compete agreement is an agreement in contract law that prohibits an employee from directly competing with their employer in the same business or profession.

These can be separate agreements or a clause within a broader contractual agreement.

Such agreements can help protect employers from losing trade secrets or other valuable confidential information they may obtain during the course of their employment. It can also be a tool that helps employers keep valuable employees because it can make it much more difficult for such employees to leave their employment and enter into direct competition with the past employer, either through a competitor or a new business started by the past employee.

Non-compete agreements can be very useful, but they aren’t always for every business. There are many legal considerations that must be taken into account, specifically how reasonable the non-compete agreement is – which will be discussed below. The value of a non-compete agreement is based on the individual circumstances surrounding your consideration of one.

If you have questions about whether or not a non-compete agreement is the right move for your business, Summerfield Law Office can help you review your circumstances and understand how and if such agreements can work for you.

How do I make a non-compete agreement reasonable in scope?

Valid non-compete agreements are a very serious legal matter because they can directly affect a person’s right to make a living. These are not agreements that can be written in just any manner, and should be verified by a Riverview Florida Small Business Attorney with experience in drafting and enforcing non-compete agreements. In legal agreements, specific wording is very important – and non-compete agreements are no exception.

The first step in ensuring that a non-compete agreement is reasonable in scope is to ensure that such agreements protect a legitimate business interest. For instance, they cannot be used to hold an employee captive or prohibit them from generally engaging in other employment that may enable direct or indirect competition. A valid agreement may state that an employee cannot use a specific formula or product recipe in their private endeavors or for generic competitors. Such business interests must generally be defined by statute in order to be looked at as valid.

If you believe such an agreement will protect a legitimate business interest, Florida law also requires that non-compete agreements must be reasonable in the time in which they are enforceable and the area in which they are enforceable. While there is no directly established legal time frame during which a non-compete agreement can be deemed as valid, courts generally accept that 2 years is a valid and enforceable time frame during which to restrict an employee from competing with a past employer. Additionally, there is no specifically enforceable geographic area in which a non-compete agreement would be able to be validly enforced. However, courts tend to restrict such agreements to an area where the employer actually does business.

For instance, if your business is located in the Tampa area, you would likely not be able to prohibit an employee from competing with you for fifteen years after employment even if such competition was restricted to the Tampa area. If your business only conducted business within the Tampa area, you would likely not be able to restrict a former employee from competing anywhere in the State of Florida even if such restriction was only for 2 or less years.

How do I find out more information about non-compete agreements?

Florida law governing non-compete agreements can be quite difficult to understand. It is extremely important that business owners seek the advice of an experienced Hillsborough County Small Business Attorney that can help protect the company these owners have worked hard to build. A non-compete agreement can be a strategic move in growing a business as well as protecting one, and Summerfield Law Office is pleased to work with employers on non-compete agreements as well as other legal aspects of business ownership and growth. Contact us for more information about whether or not a non-compete agreement is right for your business and to see how we can be of service to you.