In order to be enforceable, must be reasonable in both the duration and scope. Duration refers to the length of time for which a noncompete agreement remains valid and enforceable. Scope, on the other hand, refers to the geographic scope – the area in which the noncompete agreement will be enforced. This post will look at what constitutes a reasonable duration of time for the noncompete restraint set forth in the employment contract under Florida law.
Florida’s noncompete statute, Fla. Stat. § 542.335, creates rebuttable presumptions as to when a noncompete agreement’s duration provision is enforceable. By that, the statute provides that the court “shall presume” a noncompete agreement between an employee and employer is reasonable if the noncompete agreement is enforceable for six months or less. If an employee and employer enter into a noncompete agreement that is enforceable for more than two years, such agreements are presumed under the statute to be unreasonable.
Note that Florida’s noncompete statute creates no presumption for or against employer/employee noncompete agreements that have duration provisions between six months and two years. Further, although the statute creates presumptions for and against enforcement, the presumptions may be rebutted if a party shows a reasonable basis for the relevant duration provision.
Section 542.335’s presumptions concerning duration vary depending on the type of noncompete being enforced. If the noncompete agreement is being enforced against an employee, the duration of the agreement must be shorter (six months) in order to be presumed reasonable. In contrast, noncompete agreements enforced against a distributor or the seller of a business are allowed greater durations. Noncompete agreements enforced against a distributor, dealer, franchisee or licensee of a trademark are presumed reasonable if the duration is for one year or less. Under section 542.335(1)(d)(3), noncompete agreements enforced against a seller of a business are presumed reasonable if the duration is three years or less.
W Mason is a partner with Fox Rothschild LLP and serves in the Firm’s Litigation and Financial Services Industry departments in Fox Rothschild’s West Palm Beach office. An accomplished business trial attorney, W represents both plaintiffs and defendants in state and federal courts in employment disputes involving restrictive covenants, shareholder disputes, contract disputes, banking litigation, fraud claims, Uniform Commercial Code (UCC) claims, and other commercial disputes.
Below are some of W’s recent posts on Florida Noncompete Agreements:
Drafting Noncompete Agreements under Florida Law
Enforcement of Florida’s Noncompete Statute in Foreign Jurisdictions