Florida restrictive covenant law is simple to understand, but difficult to apply. Here’s what I mean: Florida law absolutely allows a business to prohibit someone from working in a certain area for a certain period of time. Have you ever heard anyone say Florida restrictive covenant law is basically dead because they’re not enforced in Florida? It’s not true!
In fact, Florida restrictive covenant law clearly allows a Florida business to prevent an employee from working in a certain area for up to two years. If a restrictive covenant is reasonably necessary to protect the legitimate business interests of the business, the covenant will be enforced if the geographic restriction and the durational restriction are both reasonable.
So what’s “reasonably necessary?” What business interests are “legitimate?” And what durational or geographic restrictions are “reasonable” under Florida restrictive covenant law? The only easy part concerns the durational restriction (how long someone is prevented from working or owning a competing business). Florida restrictive covenant law states that a duration of up to two years for an employee or contractor and up to five years for a former business owner are presumed to be reasonable. The rest of it is up to a judge!
The kinds of things that inform a judge about a restrictive covenant when applying Florida restrictive covenant law include: over what geographic area does the business get customers/patients/clients? What would happen to the business if the restrictive covenant wasn’t enforced?
Business owners have to be alert when seeking to enforce a restrictive covenant, since enforcement by an injunction is an “equitable remedy.” That means the business has to have “clean hands” to enforce the covenant. Florida restrictive covenant law would prevent, for instance, an employer from enforcing a restrictive covenant against and employee of the employment agreement is breached byte he employer. It might prevent a restrictive covenant from being enforced against a former owner if, for instance, the new owner didn’t pay the former owner part of the purchase price.
Finally, people considering enforcing or challenging a restrictive covenant have to be fully informed about Florida restrictive covenant law. What if, for instance, the value of removing or enforcing it is $100K, but it costs the same amount in legal fees and costs to enforce it? What if there is a prevailing party’s lawyer’s fees in the restrictive covenant that exposes the litigant to possibly having to pay the legal fees of the other party? Give the cost and risks like these, Florida restrictive covenant law tends to have a chilling effect when it comes to challenging restrictive covenants and tends to favor the deeper pocket, most often the business.
Florida restrictive covenant law is simple, but not easy (and not cheap).
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