A Comparison Of New York And Florida Law Governing Non-Compete Agreements

Introduction

It is not uncommon for a non-compete agreement for an employee located in Florida to be governed by the law of another state. For example, a senior sales director who is based in Florida may sign a non-compete agreement containing a New York choice of law provision. The parties drafting the non-compete agreement may select the law of another jurisdiction for a number of reasons, one being that the underlying company is headquartered and more familiar with the laws of another state. This post will compare Florida law governing non-compete agreements to New York law. Future posts will make a similar comparison to non-compete laws in major jurisdictions, including Texas, California, Illinois, Delaware and Pennsylvania.

Florida Law on Non-Compete Agreements

Florida Statute § 542.335 governs non-compete agreements. Courts interpreting this statute have noted that it provides a "comprehensive framework for analyzing, evaluating and enforcing restrictive covenants contained in employment contracts." Proudfoot Consulting Co. v. Gordon, 576 F.3d 1223, 1230-31 (11th Cir. 2009), citing Envt'l Servs., Inc. v. Carter, 9 So.3d 1258, 1262 (Fla. 5th DCA 2009). For a court to find that a non-compete agreement is valid under Florida law, the party seeking to enforce the non-compete agreement "shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant." Proudfoot, 576 F.3d at 1231, citing Fla. Stat. § 542.335(1)(b). Section (1)(b) of 542.335 sets out a non-exhaustive list of legitimate business interests. These interests include (1) trade secrets; (2) confidential business information; (3) substantial relationships with existing or prospective customers; (4) customer goodwill; and (5) extraordinary or specialized training.

Besides establishing a legitimate business interest, a party seeking to enforce a restrictive covenant in Florida must also prove that the covenant is reasonable in regards to time, area and line of business. Proudfoot, 576 F.3d at 1231, citing Fla. Stat. § 542.335(1). Once the party enforcing the non-compete agreement establishes that the agreement is reasonably necessary to protect the legitimate business interests, the burden shifts to the party opposing enforcement to show that the "contractually specified restraint is overbroad, overlong or otherwise not reasonably necessary to protect the established legitimate business interests." Id. citing Fla. Stat. §...