A Review of Non-compete Agreements - How Is Yours?
By: Darren R. Inverso, Esq.
Over the course of 2017 and 2018, I have had multiple cases involving non-compete agreements. In some instances, I was retained by the employer and in others by the employee but in all instances, the same basic analysis applies:
Under Florida law, non-compete agreements may be enforced by the employer so long as they are reasonable with regard to time and geographical area, and protect a legitimate business interest of the employer as defined by Florida statute. Generally, restrictions of up to two years and covering areas where the employer actually does business will be considered reasonable by a court. Even where the restrictions in the agreement are found to be unreasonably broad, the court has the authority to modify the agreement so as to impose more reasonable restrictions. Usually, enforcement of a non-compete will come down to whether the employer has a statutorily defined, legitimate business interest that can be protected, and if so, whether the employee or former employee has used that business interest in such a way as to result in unfair competition.
So, what does that all mean? First and foremost, non-compete agreements and any other restraint on trade are generally disfavored under the law. With that basic premise, the Legislature has created Florida Statue Section 542.335 which is a specific exception to permit willing parties to enter into agreements that restrain trade under certain specific circumstances.
As mentioned above these agreements need to be reasonable as to duration and geographical area. The latter has presented a bit more of a problem in recent years given the unlimited boundaries of many companies especially in the sales industry where ironically non-compete agreements are the most prevalent. Generally speaking the ability to simply state in an agreement the time and geographical restrictions is the east part. Where the rubber meets the proverbial road is actually defining the legitimate business interest. Of course, every employer is of the strong opinion that every aspect of its business is a “legitimate business interest” but the law defines such an interest very differently. Under the law, the following are considered legitimate:
- Business interests are defined in the statute and include, but are not limited to, trade secrets; valuable or confidential information other than established trade secrets;
- Relationships with existing or specific prospective customers;
- Customer goodwill associated with an ongoing practice or name, geographic area, or particular trade; and
- Extraordinary or specialized training of employees
Now What? But Darren he signed a non-compete how can he open up across the street… Or something like that is said very often. Well, the answer is “it depends”! Non-compete agreements are creatures of Statute (law) and interpreted by Judges using a history of prior decisions that never quite fit the actual factual circumstance in any given case. Therefore, it’s virtually impossible to predict the enforcement of any non-compete agreement but there are some items to look for in existing agreements that may trigger an employee or an employer to look a little deeper and seek legal counsel:
- Non-compete agreements need to be in writing;
- They need to be signed and have some independent consideration (value) separate from simple employment compensation;
- Obviously, duration and geographical limitations need to be reasonable; and
- The Legitimate Business Interest must be defined and legally recognized;
In sum, non-compete agreements are a valuable tool that can promote investment in and transparency between employers and employees. They can be used to negotiate higher compensation for employees and to secure business and trade secrets. Unfortunately, these agreements can also be used for kindling during the holidays on a cold winter night. That being said, review your non-compete agreements, review your business plans to evaluate if a non-compete agreement should be in place and do your homework to make sure these agreements are fair to all parties involved.
Darren Inverso, Esq. is the Managing Partner of the Inverso Law Group serving Litigation, Real Estate and Corporate clients in Sarasota, Bradenton, Lakewood Ranch and all of Southwest Florida. 1800 Second Street, Suite 884, Sarasota Florida O 941-926-6039 www.Inversolaw.com
Are You A Contractor? Maybe or Maybe Not
By: Darren R. Inverso
In Florida, it is a criminal offense to engage in contracting work or otherwise act in the capacity of a contractor without a valid Florida contractor’s license. Contracting without a license in Florida is a serious criminal offense and can be charged as a felony or misdemeanor carrying possible jail time and fines of $1,000.00 and higher.
On a regular basis, I am asked by friends and clients whether or not the activity they are performing requires a contractor’s license, whether they need to register with a local government and how they can be sure that the activities they are performing are in compliance with Florida law. This article briefly defines Contracting, Licensed activities and the difference between Licensing and Registration.
Under Florida law, the offense of “Contracting Without a License” can encompass a broad range of conduct related to the construction industry. Section 489.127, Florida Statutes, provides as follows:
- No person shall:
- Falsely hold himself or herself or a business organization out as a licensee, certificate holder, or registrant;
- Falsely impersonate a certificate holder or registrant;
- Present as his or her own the certificate or registration of another;
- Knowingly give false or forged evidence to the board or a member thereof;
- Use or attempt to use a certificate or registration that has been suspended or revoked;
- Engage in the business or act in the capacity of a contractor or advertise himself or herself or a business organization as available to engage in the business or act in the capacity of a contractor without being duly registered or certified;
- Operate a business organization engaged in contracting after 60 days following the termination of its only qualifying agent without designating another primary qualifying agent, except as provided in ss. 489.119 and 1195;
- Commence or perform work for which a building permit is required pursuant to part IV of chapter 553 without such building permit is in effect; or
- Willfully or deliberately disregard or violate any municipal or county ordinance relating to uncertified or unregistered
Subsection (f) above is where a lot of confusion occurs. What exactly does “acting in the capacity of a contractor” mean? Well, it depends!!
“Contractor” means the person who is qualified for, and is only responsible for, the project contracted for and means, the person who, for compensation, undertakes to, submits a bid to, or does himself or herself or by others construct, repair, alter, remodel, add to, demolish, subtract from, or improve any building or structure, including related improvements to real estate.
Therefore, unless otherwise exempted, for a person or company to perform any of the above, that person or entity must either be Licensed or Registered. To be Licensed, or a Certified Contractor, you must be able to pass the State Contractor’s Exam, provide a proven record of financial stability, and present evidence of your experience for the category in which you wish to be licensed. A more detailed overview of how to become a Licensed Contractor can be found on myfloridalicense.com.
For a contractor to be Registered he or she must obtain a local or city license and apply of the initial registration license. Once the contractor has applied to the Construction Industry Board, then he or she may only practice in the specific city or local area where its permission has been granted.
In sum, for any person who wishes to perform improvements to real estate, they should seek professional advice to make sure they are in compliance with all local and state rules and laws. For those seeking to hire a contractor its important to understand the scope of your own project, what requirements are placed upon you as the owner and how best to protect your property and yourself from unlicensed activities.
Darren Inverso is the Owner and Managing Attorney at the Inverso Law Group specializing in Construction and Commercial Litigation, Real Estate Law, Banking law, Condominium Association law, Estate and Probate matters and Creditors rights. He can be reached at (941) 926-6039 or via email at email@example.com
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