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I was contacted recently by a prospective client whose former sales representative had set up a competing business.   The prospective client had a written agreement with the former sales representative that prohibited the representative from: a.) soliciting customers of the client for a period of time after the representative’s business relationship with the client had ended; and b.) using confidential information that she had learned or acquired while performing services for the client.

This prospective client asked me if there was anything that could be done, under Florida law, to stop the former sales representative from competing with him and to essentially shut her new business down.  Unfortunately, the answer for the client was “no.”

Florida Statutes Sec. 542.335 addresses what are known as restrictive covenants.  Two basic such types of restrictive covenants are non-solicitation agreements and non-competition agreements.  While they frequently go hand-in-hand and many employment and independent contractor agreements contain both, they are most certainly not the same and offer different types of protection.

Non-solicitation agreements are designed to prevent an employee or independent contractor from soliciting customers of the company for her own benefit and to the detriment of the company while employed by or providing services to the company and for a period of time after the employment or business relationship ends.   This frequently, although not always, is further extended to prohibit the solicitation of other employees of the company upon the termination of the employment or business relationship.

Non-competition agreements, by contrast, prohibit an employee or independent contractor from competing with her employer both during the employment or business relationship as well as for a finite period of time after the relationship ends.   The length of presumptively valid periods of non-competition are described and set forth in Florida Statutes Sec. 542.335.

Simply put, merely because a former employee is prohibited from soliciting customers once her employment relationship ends does not prevent her from competing if there is no non-competition agreement.  Technically, she can compete all she wants and not be in breach of her agreement; she simply would be precluded from soliciting customers of her former employer in her new endeavor.

It is extremely important that a business, when thinking through the restrictive covenants to include in an agreement with an employee or independent contractor, to ensure that it has a comprehensive document that prohibits former employees and independent contractors from: a.) soliciting customers of the business; b.) competing with the business; and c.) using confidential information acquired during the employment or business relationship.  That agreement should include language that if there is a breach of the agreement, because of the difficulty in ascertaining damages, the employer is entitled to injunctive relief.

Non-competition agreements—or non-competes as they are routinely referred to—are common and are regularly enforced and upheld by Florida courts.  A non-compete is designed to limit what an employee can or cannot do both while employed by a business and after the employment relationship ends although non-competes can apply to persons other than those merely defined as employees.

In a nutshell and in its most basic form, a non-compete prevents an employee of a business from working for a competitor of  his employer both during the time he is employed by that employer and for a certain period of time after the employment ends.  Florida Statutes Sec. 542.335 governs non-competes in Florida that were entered into after July 1, 1996.  Amongst other things, it requires that the non-compete be in writing and signed by the person to whom the non-compete applies and that there be a legitimate business reason for the non-compete.  Legitimate business reasons, under Sec. 542.335, include but are not limited to trade secrets defined in Florida Statutes Sec. 688.002(4); customer or client goodwill; substantial relationships with  specific customers, whether those customers are existing or even prospective; and valuable confidential business information that does not necessarily rise to the level of being a trade secret.

If a court finds that a non-compete is not supported by a legitimate business interest that non-compete will be deemed unlawful.  Simply put, under those circumstances, the non-compete is void and unenforceable

Whether the period of time that a person is prohibited from competing, after the employment or business relationship ends, is ultimately considered reasonable depends upon the nature of that relationship.  Florida Statutes Sec. 542.335 provides for the following presumptively reasonable periods:

  • when the non-compete is against a former employer, agent or independent contractor and is not part of the sale of a business, the court presumes that a restrictive period of six months or less is reasonable and a period of more than two years is unreasonable;
  • when the non-compete is against a former distributor, franchisee, dealer or licensee of either a trademark or service mark and that is also not part of the sale of a business, the court presumes that a restrictive period of one year or less is reasonable and a period of more than three years is unreasonable;
  • when the non-compete is against the seller of all or part of a business, the court presumes that a restrictive period of three years or less is reasonable and a period of more than seven years is unreasonable.

The presumptions laid out in Florida Statutes Sec. 542.335 are rebuttable presumptions.

This means that the person subject to the non-compete can bring forward evidence as to why the restrictive period should not be enforced even if that restrictive period falls within the confines of Sec. 542.335.