Non-Compete Legal Matters

Non-Competition

Non-compete agreements are contractual terms wherein (a) an employee, (b) franchisee, or (c) person selling a business agrees not to work for a competitor and/or do business in a particular industry within a specified area for a specified amount of time after (a) leaving a job, (b) discontinuing operations of a franchise, or (c) selling the business. Florida courts will enforce these agreements if the terms are deemed “reasonable.” Sometimes Florida courts will enforce non-compete agreements when the specific terms of the agreement are overbroad or unreasonable but the actions of the competing person are particularly egregious, in which case the court essentially re-writes the terms of the agreement and enforce the new, narrower terms.

Non-Solicitation

Non-solicitation agreements are contractual terms, that prohibit an (a) employee, (b) franchisee, or (c) person selling a business from attempting to hire employees or solicit customers of their former (a) employer, (b) franchisor, or (c) business for a specified period of time.

Trade Secrets and Proprietary and Confidential Information

Proprietary and confidential information is information belonging to a company that is (i) specialized, (ii) not generally available to the public, and (iii) for which reasonable steps have been taken to keep confidential. Examples include customer lists, pricing information, and customized tools and techniques. Florida law prohibits an individual, such as a former employee, from using and/or disseminating information that a court determines qualifies as a “trade secret,” even if no written agreement exists between the individual and the owner of the information. However, many (a) employers, (b) franchisors, and (c) business purchasers require that (a) employees, (b) franchisees, and (c) and outgoing business owners sign confidentiality agreements acknowledging that certain information is proprietary, confidential, and in the nature of a trade secret. The parties typically agree, not only to maintain the information’s secrecy, but also to paying a specified amount of damages if the information is misappropriated. Such written agreements may increase the likelihood that a court will determine that information is a protected trade secret, but a court will also decline to enforce such agreements if it determines that the information is, in reality, not highly specialized and/or is otherwise widely known. Sometimes a court may even determine that the information is highly specialized and not widely known, but nevertheless, reasonable steps have not been taken to protect the information.

For example, a company may sue a former employee who took customer and pricing lists when the employee left his or her job, but the court may determine that the company failed to take reasonable steps to protect the information by allowing several other former-employees to keep company laptops that contained the same information.

Oftentimes, trade secrets are used to argue for the reasonableness of very broad restrictions contained in non-compete and non-solicitation agreements. For example, a company may argue that the confidential nature of information a former employee had access to makes it reasonable to prohibit that individual from working in an industry anywhere in the state of Florida for three years; whereas, only a one year prohibition within a 10 mile area would have been reasonable if trade secrets were not involved.

The lawyers at Chepenik Trushin LLP have broad experience in handling the litigation and resolution of these claims and look forward to working with you.

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