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Florida Restrictive Covenant Agreements

 

FLORIDA RESTRICTIVE COVENANT AGREEMENTS


Florida has a comprehensive statutory framework regulating enforcement of noncompete agreements and other restrictive covenants. Specifically, after first providing that contracts which are in restraint of trade are generally unenforceable under the law (see Fla Stat., FS 542.18), Florida statutes carve out exceptions for certain restraints of trade, including certain agreements be­tween employers and employees (see Fla Stat., FS 542.335).

Although this is not an exhaustive list, the following are various components of enforceable restrictive covenants:

  • The restrictions must be reasonable in time, area, and line of business;

  • The agreement must be in writing and signed by the person against whom enforcement is sought;

  • The restrictions must be supported by one or more legitimate business interests (legitimate business interests include, but are not limited to, the following: trade secrets; other valuable confidential busi­ness or professional information; certain relationships with current or potential customers, patients or clients; special­ized training; and goodwill associated with an ongoing business or profes­sional practice, by way of trade name, trademark, service mark or trade dress, a specific geographic location, or a specific marketing or trade area); and

  • The contractually specified restraint must be reasonably necessary to protect the legitimate business interest or inter­ests justifying the restriction (once this is established, the individual opposing the restraint carries the burden to prove that the restraint is not reasonable).

The statute expressly states that courts “shall not” consider the economic or other hardships that may result if a restrictive cov­enants agreement is enforced against an in­dividual. However, courts do consider other defenses including: 1) whether the entity seeking enforcement is still in the same line of business; 2) legal and equitable defenses, and 3) the “effect of enforcement upon the public health, safety, and welfare.” See Fla Stat., FS 542.335(1)(g)((1),(2) and (3).

The Eleventh Circuit’s Decision in Proudfoot  

In Proudfoot Consulting Co. v. Gordon, 576 F.3d at 1226, (11th Cir. 2009), the defendant, Derrick Gor­don, signed a restrictive covenants agreement in connection with his work for the plaintiff, Proudfoot Consulting Company (Proudfoot). “The Agreement prevent[ed] Gordon, for six months after his employment with Proudfoot end[ed], from working for a direct competitor or client of Proudfoot, contacting Proudfoot’s clients and soliciting Proudfoot’s employees. The Agreement also bar[red] Gordon from using or disclosing Proudfoot’s confidential information and from retaining Proudfoot materials after his employment end[ed].” The agreement did not define the geographi­cal scope of the restrictions. Gordon left Proudfoot in June 2006 to work for a direct competitor. The competitor then landed a substantial project in Canada for a client of Proudfoot. Gordon both solicited the client and worked on the project on behalf of his new employer. Proudfoot then brought suit for injunctive relief and damages.

The district court found that all of the restrictions were en­forceable under Florida law and entered an injunction preventing Gordon from working for any direct competitor, soliciting Proud­foot’s clients and employees, and using or disclosing confidential information.

On Appeal, the Eleventh Circuit court affirmed the district court’s finding that enforcement was proper because “Gordon’s employment with [the competitor] endangered the [confidential] information . . . .”

The information provided above is intended to give you a basic understanding of restrictive covenant agreements in employment situations, but this does not constitute legal advice and it cannot substitute for a thorough review and determination of individual employment issues, situations and requirements with your attorney.


 

 
 
Samole Law Firm, P.A
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