As our readers are likely aware, non-competes and non-solicitation agreements are common throughout many industries. They ensure trade secrets are protected and that employees cannot use the effort and training given to them by their employer against that employer. Indeed, they help keep some industries stable, but with an executive order signed over the summer, they may soon be unenforceable.
Non-compete agreement clauses or agreements
Non-competes and non-solicitation agreements are contracts or clauses within contracts that mandate that an employee cannot compete with their employer. This is usually during the time of employment, but it can also be for an amount of time post-employment. Generally, they are limited in geographic and business scope, but they also, usually, include some prohibition on client/vendor poaching.
The law in Florida
As of right now, state law upholds non-competes and non-solicitation agreements. Though, the restrictions in them must be reasonable in business scope, geography and time. And, the agreements or clauses must be for legitimate business interests.
The executive order
On July 9, 2021, the new administration put out an executive order on “Promoting Competition in the American Economy,” which targeted non-competes and non-solicitation agreements. Under the new guidance, the administration belies that non-competes and non-solicitation agreements inhibit the economy by reducing the economic freedom of employees to negotiate higher salaries or switch jobs. As such, the administration is pushing the Federal Trade Commission to issue rules to curtail these agreements. It also asks the FTC to look for other unfair industry practices that substantially inhibit competition, and they included a fact sheet to give some examples of policies they would like the FTC to adopt and why.
As many Sarasota, Florida, Tampa gulf coast metro area business owners know, non-competes and non-solicitation agreements can be a great way to avoid business litigation. And, when there is breach of contract litigation for business owners that deal with these agreements, it is extremely important that the courts uphold them.