People in Port St. Lucie, Stuart, and other areas of the Treasure Coast may start thinking about a non-compete agreement if they need to hire an employee to do certain kinds of work. They may also need assistance from a non-compete lawyer if they’ve been asked to sign such an agreement by an employer.
What does a non-compete lawyer do?
Non-compete lawyers often help clients with a variety of business and intellectual property issues. With non-compete issues, they may draft such an agreement, or they may advise a client who is thinking about signing one. If you need to go to court to challenge a non-compete agreement, they will represent you in this process.
What is a non-compete agreement?
A non-compete agreement, also sometimes called a restrictive covenant, is a document an employer may ask an employee to sign in order to protect legitimate business interests. (More on that later.) Typically, it will state that the employee won’t work for any competitors during their employment, and often for a specific period of time after their employment ends. Florida law specifies that non-compete agreements must be reasonable, and should be based on the following legitimate business interests:
- Trade secrets (subject to interpretation of Florida statutes)
- Confidential business or professional information that has value to the company but doesn’t meet the qualifications of trade secrets
- Significant relationships with existing or potential clients, customers, or patients
- Very specialized or intense training required for a position
- Goodwill of clients, customers, or patients regarding trademarks/logos in specific geographic or marketing areas
How enforceable is a non-compete agreement?
This is a very common question about non-compete laws in Florida. Challenging such a contract often depends on whether you can make a case that it is not reasonable. In fact, Florida’s lengthy statue on non-compete agreements mentions some variation of the word reasonable — but what does the court consider reasonable?
Your non-compete agreement lawyer will be able to advise you on whether or not your agreement may be found reasonable by a judge but, in general, a restrictive covenant should be as specific as possible. It should give an exact time frame and specific geographic location. Vague descriptions like “the local neighborhood” or “my customer base” may be very hard to enforce because they’re hard to define. On the other hand, “within 20 miles of my store,” or “my 2020 customer list for cold-calling” may have a better chance of being enforced.
Keep in mind that just because an agreement is specific doesn’t mean it’s definitely reasonable. If your specifics are simply too restrictive, the judge may not enforce the document. In most cases, using a time frame of more than two years is probably not a good idea, but timeframes also depend on varying circumstances.
Geographic locations should also be reasonable. If you have one store in Port St. Lucie, saying your employee can’t get a similar job anywhere in Florida for two years might be unreasonable. However, if you have a chain of stores throughout the state, this might be perfectly reasonable. Smaller areas are usually more enforceable than larger ones, unless your company is very large and the training or information involved is extremely extensive.
These are all factors your non-compete lawyer will take into consideration when drafting your contract. For example, let’s say you have a custom boat detailing business and you need to hire someone to help with the work load. You will need to spend a lot of time training this person how to detail boats, do custom jobs, etc. Even once the initial training period is over, you may sometimes teach them new techniques as different customer situations arise. There may be specific methods you use for detailing that your competitors don’t. If this is the situation, you may not want to train a new employee to provide this level of service only to have them take all that knowledge and start a competing business. In this case, you might want them to sign a restrictive covenant.
If your business is based in Port St. Lucie but you occasionally get customers from elsewhere in Florida, and a few from out of state who are visiting Florida, can you stop your employee from starting a boat detailing business anywhere in the country? The ultimate answer is most likely not as this may not be considered reasonable. Reasonably, you could ask them to agree not to work for or create any boat detailing business in Port St. Lucie for the next two years. If you have a lot of business from just outside the city limits, you may talk with your attorney about extending the area somewhat—say a 30-mile radius of the city. This will likely cover a large percentage of your business.
What is a trade secret or protected information?
The statutes on this are complex. Not everything an employer believes to be a trade secret really is. For example, many people think their customer lists or phone lists for cold-calling are trade secrets. But today the same info may be readily available on the internet. If you purchased a list of leads from another company that anyone else can buy from, a judge may not agree that your customer list is a trade secret. Likewise, if you train your employees how to do a task, but they could learn the same thing from a YouTube video, your training may not be as specialized as you think. On the other hand, if you paid a consulting firm to do very specific research on potential customers for your firm only, that may be considered a trade secret.
If you’re unsure about whether you can prevent an employee from using something they learned on the job in another position, your Florida non-compete lawyer may be able to advise you on the situation.
There may also be issues with employees cultivating relationships with buyers or other businesspeople who might follow the employee to another company. This is especially true with sales representatives and other people who work directly with the same customers on a regular basis. You may want to specify that an employee can’t poach customers they only have a relationship with through your company if they decide to leave. These clauses are sometimes difficult to enforce because it may be hard to prove why a customer stopped working with your company. However, if a former employee has or works for a new, similar business, and you’ve noticed a lot of your former customers seem to be shopping there, you may want to talk with your attorney about your options.
What if I signed a non-compete agreement but I don’t think it’s fair?
In general, it’s always better to consult your business lawyer before signing any contract. This is a legally binding document that may affect your ability to make a living in the area where you currently reside for some time. The fact that a contract is restrictive isn’t always a deal breaker—often, people just starting their career like the idea of moving to another area in a few years or may have plans to move when a significant other finishes school. However, it is still important that you fully understand what you’re agreeing to and give it due consideration before signing. Your attorney can answer any questions you have, and advise you on whether the contract is unreasonably restrictive. In some cases, they may be able to suggest a revision if you want to negotiate the offer with a potential employer.
So, are you out of luck if you’ve already signed a non-compete agreement? Not necessarily. Aside from the question of whether the agreement is reasonable, there may in some cases be other reasons your lawyer can argue against a court enforcing a restrictive covenant you’ve already signed. These include any illegal actions by the employer—breach of contract, illegal discrimination, illegal conduct, or asking you to perform illegal actions on the job. If you are having any concerns about a non-compete agreement you signed, your best option is to speak with a Florida non-compete lawyer right away. Your attorney will go over your contract and ask you questions to determine the best way to move forward.
What other situations might you need a non-compete agreement for?
Sometimes people only think about non-compete agreements in relation to their employees, but there are other situations where they may be needed. For example, if you purchase a small business whose owner is very popular with their customers, you might have some concerns.
Say you are thinking about buying Ron’s bait and tackle shop in Stuart. Ron does a pretty good job selling bait and other supplies to customers who enjoy fishing in the local waters. His company financials look great—the business is profitable. You think that with an infusion of cash and your knowledge of the industry, you can make it even more so. But what about Ron? What if he decides to open another bait and tackle shop down the road? If his customers see him setting up shop nearby, they might feel more inclined to take their business to his new store than yours, even if you are investing money in sales and advertising. After all, Ron has probably been giving them advice and asking about their families for years. He knows where they like to fish, what they want to catch, and what equipment they normally use. Because of this, the store’s clientele admire Ron’s knowledge and the rapport he’s built with his customers. Often, these things may prove to be more important to a shopper than the fact that another store’s bait is a few cents cheaper per ounce.
Now, maybe Ron told you he’s selling the store because he wants to retire and spend his days doing his own fishing. It doesn’t sound like this will be a problem, but it’s hard to predict what will happen. What if there’s an economic downturn and Ron’s retirement fund takes a serious hit? What if his spouse becomes ill and needs expensive medical care? Or some other financial situation forces Ron to think about going back into business?
These concerns can be addressed by asking Ron to sign a non-compete agreement as part of the sale. You will hopefully be speaking with an attorney about the sale paperwork anyway and adding this restrictive covenant will help you protect your business investment. By making the agreement specific to the location and type of business, your attorney will give you the best chance of being able to enforce your agreement. Plus, it will be less problematic for Ron if he isn’t planning to retire. He can still open a different kind of business, or a similar business in a manner that does not infringe on the non-compete.
What if I didn’t ask a former employee to sign a non-compete contract and now I think they’re poaching my customers for a similar business?
It’s certainly better to have a properly written non-compete agreement than not have one in these situations. However, depending on the situation, you may be able to sue for other reasons. For example, if a former employee stole proprietary information or is misusing your intellectual property, you may still have a case if you can provide evidence in court. If you’re having concerns about this sort of situation, it’s best to contact a Florida business lawyer sooner rather than later so you can understand your options.
If you need assistance with your non-compete agreement in Florida, or have questions about any potential legal matter, please contact Apfelbaum Law for a consultation. We have offices in Port St. Lucie and Stuart, but provide legal services throughout the Treasure Coast and Florida.