Restrictive Covenants In Employment
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RESTRICTIVE COVENANTS are usually signed at the begining of employment. Florida Statute section 542.335(1) holds restrictive covenents are valid if the restriction is "for a reasonable time, area, and line of business." (a) The restrictive covenant must be in writing and signed by the person against whom enforcement is sought."(e.g., the employee).
Section (1)(b) states, that the Employer must be plead and prove at least "one or more legitimate business interest." A legitimate business will may be: "Trade secrets, valuable confidential and business or profession informational information that may not normally be a trade secret." F.S. section 542.335(1)(b)(2). It may also inlcude "substantial relationships with specific prospective or existing customers, patients, or clients." F.S. 542.335(3).
Finally, it will inlcude goodwill associated with (a) an ongoing business or professional practice by trade name, trademark, or "trade dress;" (b) a specific geographic location; or (c) marketing area and/or (5) extraordinary or specialized training. F.S. section 542.335(3)-(5). One- year limits are not deemed to be presumptively unreasonable. In fact, in Environmental Services, Inc v. Carter, 9 So. 3d 1258 (FL 5th DCA 2009), the court found it to be reasonable. There are some courts that deny enforcement of these agreements usually based on reasonableness.
Some of the specific clauses found in a restrictive covenant agreement are discussed below:
Non-Solicitation Clause/Non-Competition Clause: A non-solicitation agreement requires that an employee, for a specific period of time after the employment ends, to refrain from soliciting the company's employees, consultants, contractors, clients or potential clients of the former employer. It may also preclude you from participating in any way in the same conduct. In addition, a non-solicitation agreement will prohibit you from seeking out the employer's clients or potential clients and/or using the employer's client lists or trade secrets. The most litigated issue in this area is soliciting business from or performering services for "any current, former or prospective customers" of the former employer with which "the employee had any business--related contact." Environmental Services, Inc. v. Carter, 9 So. 3d 1258 (FL 5th DCA 2009).
Training Repayment Clauses: In addition to non-solicitation clauses, you see more often a restrictive covenant requiring an employee to repay training costs if the employee leaves before a given date. Florida also allows for this type of restrictive covenant to allow employers to recoup the cost of "extraordingary or specialized training," if it is a "legitimate business interest." "Extraordinary" must go beyond what is regular, common, or customary in the industry, in which the employee is employed. For the employer to prevail, the employer would need to show that the reapyment agreement was "resaonably necessary" to protect its interest.
Non-Disclosure Clause: Non-disclosure agreements force the employee (you), to acknowledge that the employer (the company) has a protectable interest in its proprietary information. The employee is required to hold in strictest confidence and promise not to disclosue, use, or publish any of the Company's proprietary information, unless it is required in connection with the employee's work for the Company, or if an officer of the Company authorizes it in writing.
Work-for-Hire Clause: These specific agreements, requires the employee to agree that he or she recognizes that any work developed by the employee, whether or not it is completed during the employee's normal work hours or using the Company's resources, is solely for the benefit of the employer. When the employee creates proprietary information it will remain the sole property of the Company.
Severance Agreements: This is the type of restrict covenant your employer could ask you to sign one at the end of your employment in order to receive severance pay. A severance agreement will contain most, if not all of the above clauses, as well as addtional clause that require the employee to waive any and all claims the employee may have against the employer for a variety of reasons, whether the employee knows or not if those claims exist. Before you sign the agreement, you should consult an attorney to review and explain the agreement to you.
Every state has different laws and rules for filing claims regarding contract breaches. If you are not in Florida, make sure to contact an attorney in your home state. To learn more about contract claims in Florida, please contact me.