When you include a non-compete, confidentiality, or other restrictive covenant in an employment contract to protect your company’s interests, it is your greatest hope that you never need to enforce it. The reality is that many businesses will need to take legal action when a former employee violates the terms of your agreement. However, while you might expect your legal options to be similar to other breaches of contract actions, suits to enforce a restrictive covenant are unique. Florida’s valid restraints of trade or commerce essentially carve out a few defenses that could tip the scale in favor of the employee.
Because of these challenges, it is wise to consult with a Clearwater business litigation lawyer about the impact of defenses in restrictive covenant enforcement cases. They include:
There Is No Writing
You can bring a breach of contract lawsuit for many verbal business arrangements and transactions, but a restrictive covenant is one agreement that must be in writing before it can be enforced. The document must be signed by the party against whom enforcement is sought, i.e., the employee. Best practices are getting the worker’s signature as part of the onboarding process or through a severance agreement when the employee is exiting.
The Clause Is Overbearing In Scope
For obvious reasons, confidentiality agreements, non disclosure clauses, and covenants not to compete cannot be unlimited. To protect the employee’s interests in finding suitable employment after exiting, the restrictive covenant must be reasonable in terms of duration, geographic area, and line of business. The law presumes that time is reasonable if the restraint is six months or less, while more than two years is unreasonable.
There Are No Legitimate Business Interests To Protect
This defense is predicated on the notion that you need a genuine reason for imposing the restrictive covenant, rather than just restraining the employee’s post-employment options. Legitimate business interests may include:
- Trade secrets and other valuable confidential information;
- Customer relationships;
- Your company’s reputation and goodwill; and
- Unique, technical, or specialized training received by the employee.
The Restrictive Covenant Is Not Reasonably Necessary As Protection
Even if you do have a legitimate business interest to protect, a restraint of trade must also be reasonable in its efforts to do so. As a defense, the former employee may argue that your restrictive covenant is overbroad, excessive in duration, or otherwise unnecessary from an objective standpoint. Fortunately, if it is found to be unreasonable as protecting a legitimate business interest, a court can use the “blue pencil” approach: The judge can modify the clause to ensure that it IS reasonable.
Contact a Clearwater, FL Business Litigation Attorney for More Information
These and other defenses can derail attempts to enforce a restrictive covenant, so it is important to know how they work. To learn more about creating solid restrictive covenants and your legal options for breach, please call(727) 785-5100 to set up a consultation with our team at Clearwater Business Law. Our business law attorneys handle a wide range of corporate matters for clients throughout Pinellas County, so we are happy to advise you.