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Restrictive Covenants: Requirements & Enforceability

Florida courts consistently enforce restrictive covenants, including non-competes and non-solicitation agreements, if they are reasonable in time, area and line of business. Additionally, in order to be enforceable, the restrictive covenant must be supported by a legitimate business interest. Legitimate business interests include: trade secrets, confidential information, substantial relationships with specific prospective or existing customers, patients or clients, customer, patient or client goodwill, extraordinary or specialized training, and referral sources.

In determining whether a non-compete is enforceable, Florida courts must: analyze the case in favor of protecting the employer’s legitimate business interests, consider all relevant defenses; and determine if the non-compete will harm the public interest. Florida courts are not permitted to consider any potential hardship specific to the former employee caused by the noncompete’s enforcement.

Typically, the party seeking to enforce the restrictive covenant bears the burden of proof to show a legitimate business interest and that the restrictive covenant is reasonably necessary to protect that interest.

If the court decides to reject the restrictive covenant because it violates public policy, the court must: state the public policy and find that the public policy needs substantially outweigh the employer’s legitimate business interests.

If an employee breaches a restrictive covenant, a Florida court may award temporary and permanent injunctions, attorneys’ fees, and, in some cases, lost profits and liquidated damages (if the agreement includes a liquidated damages provision).

In order to seek lost profits, an employer must prove with reasonable certainty that the employer actually lost profits as a result of the former’s employee’s breach.

Does your business have a concern involving a restrictive covenant? If so, we invite you to contact our award-winning Florida business litigation attorneys at Rosenthal Law Group. Call us today to start exploring your legal options.