Status on Changes to Noncompete Agreements in Employment Law
It seems unfair that a Florida employer could prevent you from being hired by a competitor or working for another company in a similar position to what you do now. This unfairness is exactly what officials aim to address through a proposal to prohibit noncompete agreements in the workplace. The Federal Trade Commission (FTC) proposed a rule that would make it unlawful for employers to require employees to sign as a condition of employment, along with other restrictions.
The FTC is an administrative agency that enacts rules, and it can be quite some time before these regulations go into effect. As such, the law in Florida will not change unless and until officials enact it through the rulemaking process. For employees, it is helpful to know the current status of covenants not to compete, as well as what could happen if the FTC passes the proposed rule. You can consult with a Florida noncompete agreements lawyer for additional details, and check out an overview.
Florida Law on Noncompete Agreements: A covenant not to compete is known as a restrictive covenant, and it is a type of restraint on trade that employers impose on employees. The clause would allow an employer to seek damages or other relief if the employee violates the terms. To be enforceable, a noncompete agreement must:
Be in writing and signed by the employee;
Serve a legitimate business purpose of the employer; and,
Contain reasonable terms as they pertain to the geographic scope, duration, and other conditions.
Defenses to Enforcement of Restrictive Covenants: If you do not comply with the noncompete agreement, your employer could sue in court. However, there are multiple defenses and strategies available. For instance:
- The company may fail with enforcement if the agreement covers an expansive region, particularly for salespeople.
- A noncompete clause is not enforceable if it does not serve the legitimate business interests of the employer, and these must be clearly stated in the agreement.
- A long-term restrictive covenant not to compete will not be enforced if it effectively prevents an employee from working.
Process for Enforcing a Noncompete Agreement: As an employee, you could take legal action through a lawsuit to have the contract declared unenforceable. However, the most common route involves doing nothing at all. You would wait until your employer sues in court, at which point you can use the defenses mentioned above.
Proposed FTC Rule: The language of the rule under consideration is a complete prohibition on noncompete agreements in most situations. The ban applies when hiring and for current employees, and it may render existing agreements even if otherwise lawful.
Discuss Noncompete Agreements with a Palm Beach County Employment Attorney
It may be months before the FTC takes action on a rule to prohibit covenants not to compete, so the law in Florida remains in full force and effect. To learn more about noncompete clauses, please contact Sconzo Law Office. You can call 561-279-6114 or go online to set up a consultation at our Palm Beach Gardens office.