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Confidentiality, Noncompete and Nonsolicitation Agreements: One Size Does Not Fit All

Confidentiality, Noncompete and Nonsolicitation Agreements: One Size Does Not Fit All

Written by: Christina Harris Schwinn

Many businesses in Florida use confidentiality, noncompete and nonsolicitation agreements to protect their confidential information and customer relationships.  Of the three types of restrictive agreements, a confidentiality agreement is the least restrictive, the noncompete agreement is the most restrictive, and the nonsolicitation agreement is moderately restrictive.  Each of these agreements seeks to restrict employees or former employees from participating in distinct activities.

A confidentiality agreement protects against the unauthorized disclosure of a company’s confidential and proprietary information.  Confidentiality agreements are enforceable in the state of Florida provided that they restrict only the unauthorized disclosure of truly confidential information.  “Confidential information” means information that is not readily available in the public domain.  Confidentiality agreements are generally not subject to specific duration requirements.  Rather, a company’s ability to enforce exists until the information is no longer confidential.[1]

A nonsolicitation agreement seeks to restrict a current or former employee from soliciting employees or customers of the company to leave the company and join or do business with a competitor.  Nonsolicitation agreements typically have a post employment termination period of up to two years and they must be in writing.

A noncompete agreement seeks to prohibit a current or former employee from competing with the company by opening a competing business or going to work for a competitor for a certain period of time.  In Florida, noncompete agreements are governed by § 542.335, Florida Statutes and they must be in writing.

A company seeking to enforce a noncompete provision must establish that it has a protectable legitimate business interest.  A protectable legitimate business interest includes:

1.         Trade secrets, as defined in s. 688.002(4).

2.         Valuable confidential business of professional information that otherwise does not qualify as trade secrets.

3.         Substantial relationships with specific prospective or existing customers, patients, or clients.

4.         Customer, patient, or client goodwill associated with:

a.         An ongoing business or professional practice, by way of trade name, trademark, service mark, or “trade dress”;

b.         A specific geographic location; or

c.         A specific marketing or trade area.

5.         Extraordinary or specialized training.

If the interest that a company is seeking to protect is not a legitimate business interest, a court will not enforce the restriction.  Further, noncompete agreements are not enforceable if the sole purpose is to restrict generic competition.  An example of a restriction on generic competition includes a provision that restricts a former employee from soliciting any person within a certain geographic region that might become a customer of the company in the future but with whom no current relationship exists.

Additionally, a company seeking to enforce a noncompetition restriction must also establish that the restriction is reasonable as to both geography and duration.  Reasonableness is determined based upon the interest being protected.

A post-termination noncompete restriction in the employment context is presumed reasonable if the restriction is for six months up to two years.  A post-termination noncompete restriction that exceeds two years is presumed unreasonable.[2]

Noncompete agreements are often drafted to include both confidentiality and nonsolicitation provisions.  Even though all three restrictions may be included in one agreement, it is important to remember that each type of restriction seeks to protect a different business interest.

Are these types of restrictive agreements right for your business?  Maybe.  To determine whether any such agreement is appropriate, a the risk analysis has to be completed that includes customer relationships, intellectual property, products and services.  The higher the competitive risk, the more likely a company should consider requiring employees to sign noncompete agreements or, at a minimum, a confidentiality agreement.  Note that noncompete agreements are not enforceable against every current or former employee.  For example, rarely would a company have a legitimate business interest in restricting a former receptionist from going to work for a competitor.  Further, an enforcement action to enforce a noncompete agreement against a former employee who had no access to confidential information, customer lists, or received no specialized training while employed would likely fail.

Because the stakes are high, noncompete agreements are litigated often in Florida.  When deciding whether to require employees to sign these types of restrictive agreements, company management should seek the services of competent legal counsel and avoid the temptation to download such an agreement off of the Internet.  Why?  Because one size does not fit all and there is no guarantee that an agreement found on the Internet would comply with Florida law or even meet the needs of your company.

Lastly, companies that have implemented these types of agreements should have them reviewed periodically and updated to keep pace with this ever-developing area of the law.


A note to the reader:  This article is intended to provide general information and is not intended to be a substitute for competent legal advice.  Competent legal counsel should be consulted if you have questions regarding compliance with the law. 

Questions regarding the content of this article may be e-mailed to Christina Harris Schwinn at christinaschwinn@paveselaw.com.  Ms. Schwinn is a partner and an experienced employment and real estate attorney with the Pavese Law Firm, 1833 Hendry Street, Fort Myers, FL 33901; Telephone:  (239) 336-6228; Telecopier:  (239) 332-2243.  To view past articles written by Ms. Schwinn please visit the firm’s website at www.paveselaw.com.

[1] Note that confidentiality provisions that seek to prohibit employees from discussing their pay with each other generally violate the National Labor Relations Act.

[2] A longer restriction period is permissible in connection with the sale of a business and under certain circumstances a post termination restriction for longer than two years could be deemed reasonable.