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How Restrictive Covenants Protect Businesses

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Many employees will have heard of non-compete or non-disclosure agreements, even if they have never had to sign one. Both are examples of restrictive covenants, agreements employers include in employment contracts to protect their business from unfair competition. These agreements aim to limit or restrict the activities of former employees.

When drafting employment contracts or dealing with a breach of contract, business owners should consult with qualified Miami contract lawyers. They will know how to apply Florida contract law to resolve an employment contract dispute through mediation, arbitration, or litigation.

These are the most common types of restrictive covenants found in employment contracts.

Non-Compete Agreement

This covenant’s purpose is to restrict former employees (for a period of time) from working with a competitor or starting a competing business nearby. Under Florida contract law, non-competes are not strongly favored because they can be seen as preventing trade amongst businesses. However, covenants are still enforceable if they have the following qualities:

  • Restricted geographic area specified is near or related to the former employer’s location of business or customer base
  • Duration of the clause is moderate (ranging from less than 6 months to 2 years)
  • The agreement serves a “legitimate business interest” other than just to discourage competition

Non-Solicitation Agreement

By signing this, employees that leave a company cannot bring their former colleagues with them or solicit business from their former employer’s customers or clients. These types of clauses are often used by professional practices to prevent losing their clientele, especially clients who had previously worked with ex-employees. These covenants are relatively more enforceable than non-competes.

Confidentiality (Non-Disclosure) Agreement

This agreement protects the proprietary information and materials of a business from being revealed to competitors and to the wider market. Business owners can maintain their competitive advantage by prohibiting their former employees from stealing and divulging information and materials. Some of the information that should not be disclosed to the public include: trade secrets, secret formulas, original concepts, and computer codes. This clause is often enforced and courts are willing to allow wider protections to owners when there is a verifiable breach of contract.

With the help of knowledgable Miami contract lawyers, business owners can successfully draft employment contracts with restrictive covenants that will provide the strongest protections to their businesses.

If an employment contract dispute does arise, the attorneys at Graham Legal can resolve it through mediation, arbitration, or, if need be, litigation. Call our law office today to find out how we can represent you in a contract dispute.

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