The Enforcement of No Competition Law in Florida

Under Florida law, in certain circumstances, an independent contractor agreement can contain an enforceable non-compete clause. Florida courts will uphold a non-compete agreement if the non-compete clause is reasonable in geographic scope and reasonable in its time frame.

If you’re operating a business in Florida, you should know Florida’s specific statutes surrounding non-compete clauses, such as what they can and cannot do. The business law attorneys at Legal Counsel, P.A. can explain.

What are Non-Compete Agreements?

A non-compete agreement is a contract where an employee agrees not to enter into competition with a competing employer after the employment period is over. However, recent developments in 2024 have seen the Federal Trade Commission (FTC) issue a rule to ban noncompete agreements nationwide.

Although there have been legal challenges, this rule aims to protect workers’ freedom by preventing employers from restricting their future employment opportunities. The situation is evolving, and the enforceability of such agreements may vary depending on ongoing legal proceedings.

What Happens if the FTC’s Ban isn’t Blocked?

If the FTC’s ban proceeds, non-competes past and present will no longer be enforceable. If this happens, we would recommend transitioning to using non-disclosure agreements to protect confidential information. With an NDA, employees cannot take any proprietary information or technology they used while working for you to your competitors. If they do, you can file a lawsuit against them, and potentially their employer.

What You Need to Know About Non-Competition Agreements

Should they remain unbanned, non-compete agreements must be in place to protect a legitimate business interest. The courts will look at the time frame, place, and protected legitimate interest when ruling on the non-compete clause’s enforceability.

How Do Non-Competition Clauses Work?

Non-competition clauses are governed by Florida Statute §542.335. A non-compete clause can restrict an independent contractor from working for a competitor during the duration the worker is contracted with your company and for a specific period after their original contract work ends.

For the independent contractor agreement to be enforceable, Florida Statute §542.335 says a court shall presume six months or less to be reasonable for a non-compete clause and two years or more to be unreasonable.

Importance of An Attorney and Writing Proper Non-Compete Clauses

When putting together your independent contractor agreement with non-competition clauses, you must understand the law and the contract needs to be written properly. In cases where there might be a dispute regarding whether a contractor is an employee or an independent contractor, a non-compete clause could, in some cases, be used as evidence that an employee relationship exists.

When drafting an independent contractor agreement, a company needs to balance the contract so that it makes clear that the independent contractor is indeed independent. At the same time, it must also include a robust enough non-compete clause that supports your company’s legitimate business interests.

How Can a Worker Be Classified as an Independent Contractor?

For a worker to be classified as an independent contractor, they must have control over how they do their job. Hence, the independent contractor should not be bound to location, hours, etc.  The independent contractor will generally provide their own tools, computers, telephones, etc.

Other considerations may also need to be made when determining whether a worker is a bona fide independent contractor. If the language of the agreement doesn’t establish that the contractor is independent, the relationship could be questioned and the business could face additional employment taxes, which could have major financial implications.

What are Legitimate Business Interests as it relates to Non-Compete Agreements in Florida?

Legitimate business interests can include a range of things, such as:

• Trade secrets
• Customer or client lists
• Confidential customer or client information
• Any goodwill that the company has built after doing business in a given area for a period of time
• And more!

Florida law is broad in scope when defining the term “legitimate business interest.”  This is where having a sound independent contractor agreement with a non-compete agreement in place is essential.

If, in your contract, you can establish the legitimacy for protecting your business interests, then the agreement may be more likely to be rendered enforceable. When these agreements are tested in court, the court will look at the whole picture, and you may need to defend why you placed the non-compete agreement in place.

Why Do You Need a Business Law Attorney?

When writing your contract, it is wise to write it in light of the possibility that you may need to defend it in court. The business lawyers at Legal Counsel, P.A. can review your independent contractor agreements and draft your agreements so that they are more likely to be defensible if they are tried in court.

A sound independent contractor agreement can protect both parties because it helps both parties clearly understand the nature of their relationship.

Contact Legal Counsel, P.A. For Your Business Law Needs

Legal Counsel, P.A. is a business law firm in Orlando, Florida that works with small businesses and larger businesses to help them with contracts, business formation, litigation, and a range of other matters. Are you hiring independent contractors for your business?

If so, consider the importance of your contracts and the importance of having a sound non-compete clause in your independent contractor agreement. Drafting these contracts properly is important because failure to clearly establish the contractor as such can have major financial consequences and implications for your business.

Legal Counsel, P.A. can help. Have questions? We have answers. Contact Legal Counsel, P.A. today at 407-982-4321.