FTC vs. Non-Compete Agreements: What Florida Employers Need to Know

Non-compete agreements are a vital tool for Florida employers aiming to protect trade secrets, customer relationships, and investments in employee training. However, recent developments highlight the Federal Trade Commission’s (FTC) scrutiny and potential new regulations limiting their use.

The FTC’s Position on Non-Competes

The FTC has proposed a nationwide ban on most non-compete agreements, citing their impact on competition, wage suppression, and worker mobility. If enacted, the rule would:

• Ban new non-compete agreements with employees.
• Require rescission of existing agreements.
• Mandate notification to employees that non-compete clauses are unenforceable.

Florida's Current Regulations

Florida permits non-compete agreements provided they are reasonable in time, geographic scope, and business interest. Under Florida Statute §542.335:

• Agreements must safeguard a “legitimate business interest” like trade secrets or client relationships.
• Courts favor restrictions of 6 months to 2 years for employees, context-dependent.
• Broad restrictions may be narrowed but aren't automatically invalid.

Federal vs. State Regulations

If the FTC’s rule passes, it would override Florida’s current stance. Employers would need new strategies, such as:

• Confidentiality agreements for proprietary information.
• Non-solicitation agreements to prevent client or staff poaching.
• Trade secret protections under state and federal law.

Action Plan for Florida Employers

Organizations should prepare for potential changes:

1. Audit Existing Agreements: Identify all non-competes and subject employees.
2. Enhance Alternative Protections: Review confidentiality and non-solicitation agreements for enforceability.
3. Plan for Compliance: Be ready to rescind non-competes if the FTC rule passes.
4. Stay Informed: Be aware of legal challenges and implementation timelines.

Final Thoughts

While Florida has traditionally supported non-compete enforcement, the FTC’s proposed rule suggests a national shift. Florida employers should start adapting practices by reviewing agreements and bolstering alternative protections to safeguard interests amid evolving legal landscapes.