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Considering a non-compete agreement? Avoid these mistakes.

On Behalf of | Dec 6, 2021 | Employment Contracts |

Florida employers commonly ask employees to sign non-compete agreements. These types of contracts are executed for many reasons, such as to protect an employer’s confidential information, trade secrets or other intellectual property. However, there are stipulations that must be followed in order for them to be legally valid.

When determining if a non-compete agreement is legally valid, a court generally examines the terms to see if they are reasonably necessary for the employer’s protection. As such, employers should examine and consider every term in the contract.

There are several specific issues employers should consider when drafting non-compete agreements in order to ensure they are valid and enforceable.

One size doesn’t fit all

As an employer, it may be tempting to ask all employees to sign a non-compete agreement, from upper management to lower level workers. However, the problem with this approach is that non-compete agreements are designed to prevent departing employees from soliciting customers or clients, using their specialized skills elsewhere or sharing confidential business information, and these considerations may not apply to all workers.

Once you determine which of your employees should be considered for a non-compete agreement, it is time to focus on the agreement terms themselves. Avoid being too broad with geographic areas or long time periods. For example, under Florida’s non-compete statute, Fla. Stat. §542.335, a 2-year duration for the agreement would likely be considered reasonable, while a 10-year duration would not.

Don’t forget about consideration

In legal terms, consideration is something of value an employer provides to an employee in exchange for the employee agreeing to sign the non-compete agreement. Consideration is a requirement in any contract or agreement, and without it, the agreement would be unenforceable.

In Florida, continued employment is deemed adequate consideration, even if the employee is asked to sign a non-compete after starting the job. Where the non-compete is being requested at the time of termination, there would need to be consideration provided, usually severance pay, in order for the non-compete to be enforceable.

It is important to note that the laws and rules regarding non-compete agreement change over time. As an employer, if you are considering executing this type of contract, consider reaching out to an employment law attorney in your area. A lawyer can ensure that every provision is accurate and valid and your interests are protected.