Are Non-Compete Agreements Still Valid In Florida?
On January 5, 2023, the Federal Trade Commission (“FTC”) proposed a rule banning non-competition clauses in employment agreements. Approximately one in every five American workers, or 30 million people, are subject to a non-compete agreement. According to the FTC, non-competes significantly reduce worker wages, stifle new business and ideas, and exploit workers. The proposed rule would prohibit employers from entering into noncompete clauses with their workers, including independent contractors. Additionally, it would require employers to revoke existing noncompete clauses and notify their employees that the clauses are no longer valid. Non-disclosure agreements and non-solicitation agreements would not be included in the rule unless they are so broad in scope that they function as a non-compete.
The FTC has invited the public to submit comments on the proposed rule through March 20, 2023. The FTC will review the comments and may revise the rule based on the comments and the FTC’s further analysis of the issue. Once the FTC releases a final rule, it will almost certainly face legal challenges from various groups.
For now, non-compete clauses remain valid in Florida as long as they are “reasonable in time, area, and line of business.” Florida Statutes Section 542.335 states that non-compete agreements with employees, agents, and independent contractors are presumed reasonable if they are 6 months or less in duration and presumed unreasonable if they are greater than 2 years in duration. The statute also addresses presumptively reasonable and unreasonable time limits for other classes of workers.
It is a great time for employers to revisit their existing non-compete agreements, plan ahead for a possible rule affecting such covenants, and come up with alternative ways to protect their business interests. It is also a great time for employees to understand what, if any, covenants restrict their ability to compete. A qualified attorney can help to navigate the changing landscape in Florida and beyond.
For more information, please contact Ailen at acruz@guerrapartners.law.
Sources:
https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete_nprm_fact_sheet.pdf
https://www.ftc.gov/legal-library/browse/federal-register-notices/non-compete-clause-rulemaking
https://www.ftc.gov/system/files/ftc_gov/pdf/p201000noncompetenprm.pdf
Fla. Stat. § 542.335