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Non-compete agreements are popular in Florida and across the USA. The Wall Street Journal has suggested a 60% rise in lawsuits filed against those breaking non-competes, so it’s clear that the issue is rising fast. Used correctly it gives the employer exclusive access to their staff’s expertise. However, used incorrectly, and it can strangle the staff and put unreasonable demands upon them. Looking at things from an employee’s perspective, it narrows their job mobility but it does have its rewards.
What is a Non-Compete Agreement
Let’s start with the basics. A non-compete agreement is a contract signed between an employer and an employee (or contractor) designed to restrict among other things the ability of the employee or contractor to work for competitors in a surrounding area. There is usually an agreed time period and geographical location outlined. It works particularly well for lawyers and other professionals who work as part of a larger firm. It’s also commonly used in the tech and IT business. For instance if used appropriately, a former Apple employee may not leave, join Google, and inform them of Apple’s plans. It an agreement that can address privacy and business protection as well as competitive practices.
As you can see, a non-compete agreement can limit job mobility. When in place and you have signed one, generally you cannot simply leave and join another big competitor within a particular time frame. It can limit job opportunities and the pool of clients you can realistically approach for work. Signing the non-compete means you value the benefits of the job over the resulting restrictions.
Discourages Venture Capital
We have recently seen Venture Capitalists move away from those companies with non-compete agreements. Because there is an inherent culture of secrecy that accompanies a non-compete agreement, and VCs tend to invest only in what they know or can learn, they demand to know as much as possible about the company. Non-compete agreements signal that a company is locking down its secrets.
Unreasonable Time Periods and Geography Limits
These can be a problem. While there are in Florida varying degrees of allowed restrictions, these two are the most common things that will compel a judge to overturn a non-compete. The limitations must be reasonable – i.e., restricting a lawyer in Tampa from not working in New York would not be – or the non-compete agreement is vulnerable to attack.
If you’re an employee who has been asked to sign a non-compete agreement, negotiate. If you want to draft one for your employees, get legal advice. Understanding the time period and geographical restrictions is your first step. Our firm has years of experience in this area, so don’t hesitate to call us, or send us an email.