Clients sometimes ask, “Which employees should sign non-competition agreements?” The answer from a growing number of employers seems to be “Everyone” and from employees it seems to be “No One”. Recent news reports have commented on large retailers requiring that temporary or seasonal workers, stock room clerks and delivery personnel sign restrictive covenants – not the types of workers usually associated with non-compete agreements. So what’s the right approach?
Typically, states in which such agreements are enforced will honor a restrictive covenant that is narrowly tailored to protect a legitimate business interest of the employer. Florida, in particular, has a statutory scheme which is very favorable to the enforcement of non-compete agreements drafted in accordance with Florida law. Under the Florida statute, legitimate business interests include protection of trade secrets and other confidential or proprietary information, customer relationships, goodwill, and extraordinary or specialized training provided to an employee. If an employee will receive or use any such information, he or she may be restricted from working for a competitor as long as the restriction is limited and reasonable in time and geographic scope so as to protect the employer’s legitimate business interests.
Top and mid level executives who participate in business planning and development of business strategies, who are accountable for product pipeline or who are responsible for developing and maintaining customer relationships are all obvious candidates for non-compete agreements. But what about the stock room clerk or a delivery person? Does your business entrust to lower level employees certain “know-how” or business processes which, if given to a competitor, could cause harm to your business? Do your lower level employees have contact with your customers such that if they switched teams they could direct your customers to a competitor?
As your business grows and evolves, give thought to the types of employees you may want to have sign a non-competition agreement as condition of employment in order to protect your legitimate business interests when they leave your company. Consult with your attorney if you have questions regarding the scope and enforceability of restrictive covenants in your industry.