The terms of an employment agreement influence the obligations of the employer and the rights of the employee. Employers typically outline the compensation package offered and the company’s job performance expectations. They may also include rules limiting the conduct of workers.
Some of those rules even apply when the worker is at home for the weekend or after they leave the job completely. Restrictive covenants have become valuable tools for modern employers. They need to prevent their workers from using the relationships or information they develop at the company to unfairly compete against it in the future.
Restrictive covenants including non-compete agreements, give businesses protection from that kind of misconduct. However, non-compete agreements have become a source of controversy in recent years. Can employers still enforce non-compete agreements if their employees go to work for competitors or start directly competing businesses?
Attempts to ban non-competes have failed
In 2023, the Federal Trade Commission (FTC) announced that it intended to address the widespread use of non-compete agreements. In April 2024, the FTC announced a new final rule effectively prohibiting non-compete agreements in most employment contracts. In theory, the new final rule could have prevented employers from continuing to add non-compete agreements to contracts or from enforcing agreements in existing employment contracts.
However, federal court judges in Texas and right here in Florida have ruled against that policy. The judges found that the FTC overstepped its authority and enacted a policy that was too sweeping given its limited power as a government agency. The rule prohibiting non-compete agreements has been struck down as unenforceable.
Employers can continue to take workers to court for violating non-compete agreements. They can also continue negotiating terms for non-compete agreements when they onboard new workers or promote existing ones to different positions. Florida law generally requires certain limitations on non-compete agreements, including restricting how long they remain in effect and the geographic area to which they apply. Employers may need to review the language of their contracts carefully to ensure they comply.
Employers seeking to add restrictive covenants to employee contracts or to enforce existing agreements after uncovering worker misconduct may need help. An understanding of both federal and state rules is important for the creation of valid and enforceable employment contracts.