Covenants Not To Compete Intended To Discourage Use Of Trade Secrets And Practices — Not To Restrict Employment

Like many jurisdictions, the State of Florida has a statute permitting companies to use “covenants not to compete” when entering into employment agreements with employees, contractors or salespersons. This statute conditions the use of such a covenant on various elements:

• Restrictions are reasonable in terms of their length of time, geographical reach and the line of business to which they apply.
• It must be in writing, signed by the person against whom the company seeks to enforce it.
• The company enforcing it must show it has a legitimate business interest in preventing the competition in question.

These covenants will generally be presumed to be reasonable, where trade secrets are implicated, if they are under five years in length — and they are presumed unreasonable if they exceed 10 years. But, the fact that they are presumed as such does not mean the company trying to enforce the covenant cannot show that longer periods of time are reasonable under certain circumstances.

The company must be prepared to show that the purpose for the need to enforce such a covenant is premised on the concern that (1) trade secrets, (2) valuable confidential business and professional information, (3) substantial relationships with current or prospective business associates, (4) extraordinary training or (5) good will may be used by the former employee or other party in competing against the company.

If no trade secrets are involved, the length of these covenants must be much shorter: a covenant in that event is presumed reasonable if less than six months in length and unreasonable if more than two years in length. If the length of the covenant is between such lengths, the court would look to other factors to determine whether it is reasonable.

Companies need protection from unscrupulous employees or contractors who just want to take advantage of a particular situation for a future windfall. But, the law does not allow a company to attempt to impose onerous burdens on its employees who may want to stay in a similar field once they leave the company’s employ. Employers should consult legal counsel before fashioning a covenant not to compete that fits their needs.

Contact the Tampa attorneys at Saady and Saxe for a consultation about your case, whether it involves drafting of an enforceable employment agreement or enforcement of a covenant not to compete.