When a worker accepts a new job, they typically negotiate a contract with their employer. Employment contracts help make it very clear what a business should provide for employees and what the company expects in return.
Oftentimes, businesses add protective clauses to employment contracts, including restrictive covenants. The goal is to limit the future damage that an employee could create for the organization. Noncompete agreements have long been a tool utilized by employers hoping to avoid the theft of trade secrets and the unfair competition that could result from workers starting their own businesses.
Some states have banned noncompete agreements, but Florida still allows for their use and enforcement. After a failed federal attempt at banning noncompete agreements, employers may choose to use alternative or additional tools to protect them when starting a new employment arrangement.
The noncompete ban did not take effect
After the Federal Trade Commission (FTC) announced a ban on non-compete agreements in April, many businesses began looking at how to protect themselves. Some of those companies may move ahead with negotiating new employment contracts for existing staff and updating the documents they use when hiring in the future. Other concerned companies sued, which is why the ban has been declared invalid by a federal judge in Texas.
Although noncompete agreements are still enforceable, they could be subject to additional ban attempts in the near future. Many employers want to replace controversial noncompete agreements with other restrictive covenants. It is possible to obtain the same basic protections using other kinds of restrictive covenants.
Nondisclosure agreements that protect trade secrets and non-solicitation agreements can achieve the same thing that a noncompete agreement does. Non-solicitation agreements protect companies from employees trying to secure contracts with clients or hire their former coworkers after leaving a job.
Although current rules allow companies to enforce noncompete agreements, that could very well change in the future. Organizations may want to proactively protect against the scenario in which trade secrets are vulnerable in the future by changing their contracts now.
Others may need to take legal action against a former employee for a violation of a prior agreement. For the time being, existing contracts with noncompete agreements remain enforceable and valid in Florida.
The proper use of restrictive covenants in employment contracts can protect businesses without imposing an unfair burden on their workers. Tracking changes to employment laws can help organizations recognize potential sources of liability before a company suffers financial setbacks.