Articles Tagged with Non Compete Contract

Florida law tends to favor enforcement of non-competition covenants.  Under Florida law, non-competition covenants are enforceable if they protect one or more legitimate business interests and if they are reasonable in time, area, and line of business.  In fact, Florida law explicitly forbids courts from considering “any individualized economic or other hardship that might be caused to the person against whom enforcement is sought” when determining whether a non-competition covenant is enforceable.  Fla. Stat. § 542.335(g)(1).

For those reasons, companies might wish to take advantage of Florida’s non-competition laws even when the non-competition contract will be enforced outside of Florida.  In those situations, companies will likely include a “choice of law” provision in their non-competition covenants.  Generally, a “choice of law” contractual provision allows the parties to decide which state’s laws should apply to the contract.

Consider the following example:  A Florida corporation conducts business in New York.  To protect its legitimate business interests, the Florida corporation enters into a non-competition contract with its New York employee.  However, New York’s laws do not favor non-competition covenants to the same extent that Florida’s laws do.  New York law requires courts to consider whether the non-competition contract would impose undue hardship on the employee, a consideration that is forbidden under Florida law.  To take advantage of the Florida law, the Florida corporation includes a “choice of law” provision in the non-competition contract stating that Florida law shall apply to the contract.  That is exactly what a Florida corporation did in Brown & Brown, Inc. v Johnson, 980 N.Y.S.2d 631, 637 (N.Y. App. Div. 4th Dep’t 2014).  The New York appellate court, however, found that New York law, not Florida law, applied to the non-competition contract notwithstanding the contract’s “choice of law” provision.