Boasting a huge and diverse market aligned with business-friendly legislation, Florida offers fertile soil for entrepreneurs who want to thrive in their business segments.
In such a competitive market, business owners can utilize restrictive covenants to help to protect their companies’ tangible and intangible assets, including intellectual property, know-how, trade secrets, and others.
In this article, you will find out what you need to know about restrictive covenants in Florida employment contracts.
Restrictive Covenant in Florida – Understanding the Concept
Generally, restrictive covenants are clauses contained in contracts to restrict someone’s actions. In the context of employment, restrictive clauses are commonly meant to prevent employees from competing with the employer’s company.
Restrictive covenants are not considered enforceable in all states across the USA. In Florida, they are enforceable, and courts tend to favor employers over employees when enforcing restrictive clauses in a signed agreement.
Plus, Florida is one of the few states in which restrictive covenants can be enforced against independent contractors as well.
What Are the Types of Restrictive Covenants Available in Florida? – Explaining in Detail
In the following topics, we provide an overview of the different types of restrictive covenants that company owners can use to protect many aspects of their businesses.
Non-compete clauses are the most common restrictive covenants to appear in Florida employment agreements. Its purpose is to preclude ex-employees from working in a similar competitor company for a specific period after the employee’s termination.
Commonly known as confidentiality agreements, the purpose behind this type of restriction is to keep an employee from stealing or spreading business-related confidential information, including trade secrets, and any other information that gives the employer a competitive edge.
This type of restriction precludes a former employee from interfering with the business of a former employer. Plus, it also precludes a former employee from influencing other employees to leave a former employer.
Garden Leave Clause
Under this type of clause, an employee agrees to give a certain amount of notice to his/her employer in advance of a resignation. On the other hand, the employer does not require the employee to working during the remaining period.
Notice that, during the garden leave period, the employee is still considered an employee, also receiving his/her due payment. Plus, the employee is not allowed to work for other companies as the garden leave period remains.
A non-solicitation clause restricts a former employee from soliciting the customers, clients, and suppliers of a former employer for a specific period after termination.
Similar to a non-solicitation clause, a non-dealing clause precludes a former employee from dealing with any customer, client, and supplier of the former employer. Notice that this clause is applied regardless of which party approached the other.
As the name suggests, this type of restriction precludes a former employee from “poaching” clients or other employees from the former employer for a specified period after termination.
Sometimes mistaken with a non-poaching clause, a non-recruitment restricts a former employee from soliciting other employees of the former employer for a specified period after termination.
A non-disparagement clause precludes a former employee from making negative statements about a former employer, either oral or in writing.
The Enforceability of Restrictive Covenants in Florida
In Florida, the enforceability of a restrictive covenant will depend on its reasonability.
When analyzing whether a restrictive covenant is enforceable, state courts will require the employer to prove that the restrictive clauses contained in the employment contract:
- are necessary to protect legitimate business interests; or
- have only the necessary restriction in time and geographical area to protect those interests.
As provided by Florida Statue 542.335, some of the most common examples of “legitimate business interests” include:
- trade secrets
- confidential Business Information
- substantial relationships
- specialized Business Training
Typically, a court will consider 90 days or less as reasonable. Even though there were cases with longer periods that were enforced by courts in Florida, we do not recommend employment contracts with restrictive periods longer than 6 months.
Also, it is not ideal to obligate all levels of employees to sign a standard employment agreement with restrictive covenants.
Employees constantly exposed to sensitive information (e.g., executives, managers, etc.) can have more restrictions, while low-level employees with no access to sensitive information should not be required to sign a restrictive covenant.
Restrictive Covenants in Employment Contracts in Florida – We Can Help You
At Jurado & Farshchian, P.L., we have expert business attorneys that will assess your situation and tailor employment contracts according to your circumstances.