Florida Statutes Section 542.335. permits employment contracts to restrict ex-employees from carrying on or engaging in a similar business, and from soliciting old (existing) customers within a reasonably limited time and area. The same restrictions apply to business sellers, and include specific trade secrets and customer lists. Employers and business buyers can enforce these restrictions by suing for injunctive reliefand money damages. These are known as “restrictive covenants”.
Sellers of businesses are treated very seriously by this law, and usually cannot compete when there is a non-competition clause in the purchase and sale contract. Sellers face strict court enforcement of such restrictive covenants by way of injunction and can be liable for money damages. The purchaser of a business will most often have the upper hand in enforcing a non-competition clause in a purchase and sale contract.
It is common for prospective employers to ask if your old employment contract has a non-competition clause, because they will not hire you if it does. They do not want to hire you and “buy a lawsuit”.
On the other hand, the statute’s language provides employees with ways around seemingly air tight non-competition clauses which, depending on the language used, are legally unenforceable. For example, if the contract says you cannot work if you are terminated, that is different than a restriction upon the contract expiring. If the restriction only applies upon termination with cause, that is different than termination without cause.
Restrictions must also be reasonable as to area and time. Is 5 or 10 miles reasonable? How about an entire county or state? How do you measure area? By using a radius from your old office location? By using the road mileage between points A and B? What roads, the long way or the shortcut? The same goes for time. Is 2, 3 or 5 years reasonable? All of this will be determined by a court. If the contract does not specify, then a court will decide, but may rule that the restriction cannot be enforced, at all.
There are countless occupations and endless combinations of words used in employment contracts. Often times it is all black and white. Just as often, however, all of the above factors come into play. I use my knowledge and experience with these contract clauses, in litigation and trial. I can guide you in making a decision to change jobs or buy a business. In addition, I often help draft contracts to include language favorable to the client for these purposes.