You’re Hired: But First Sign This Agreement
Published on Oct 1, 2016 | By Mark NeJame; Vanessa Louise Braeley contributed to this article.
Employment agreements are becoming more common in the workplace, and are often a point of contention, particularly from the new or prospective employee’s side. Generally, a prospective employee is in a less advantageous position to know the law as it relates to contract principles and specific employment law provisions, which can (and does) make the new hire feel unsure or uncomfortable when signing an employment agreement. To make matters worse, the new employee is often fighting for a coveted position and may not want to “rock the boat” by bringing independent counsel into the mix. But this power move may have the opposite effect: the employer may view this, as a sign that, not only is their candidate serious about the job, but is cautious in conducting business. No matter the approach, one should be familiar with some of the terms that are bound to pop up during the negotiation of an employment agreement.
First, let’s clarify one thing: Florida, among many other states, follows the “at-will employment doctrine,” which means that either the employee or the employer can terminate the employment relationship at any time and for any reason. Do NOT get this confused with Florida’s constitutional “right to work,” which essentially protects an employee’s right to join, or not join, a labor union. It is because of this “at will doctrine” that employment agreements are actually a good idea. Expectations and boundaries are set, termination clauses such as notification requirements can be specified, and relationships can start off with both parties understanding what it is that is expected of them. Better yet, these terms eliminate an employer’s discretion to terminate the employee for any reason – good, bad or ugly. When employers are given ample discretion, issues such as discriminatory decision-making processes tend to be more prevalent.
"When employers are given ample discretion, issues such as discriminatory decision-making processes tend to be more prevalent."
Florida hasn’t enacted specific state legislation relating to employment law. It has, however, enacted statutes specifically addressing restrictive covenants (“RCs”). RCs generally include non-compete, non-solicitation and non-disclosure provisions. These provisions have become extremely commonplace, and are usually the driving force behind the decision to require an employment agreement be signed. RCs are disfavored by courts since they restrict competition. Because of this, the courts are not liberal in enforcing these provisions and require, at a minimum, these three things be present in order to enforce an RC:
- the restrictive covenant must be in writing and signed by the party against whom enforcement is sought;
- it must protect a legitimate business interest;
- the RC must protect the legitimate business interest in a reasonable scope and manner. Florida’s statutes provide examples of legitimate business interests, and they are all quite logical.
Generally, prospective employees are most concerned about the non-compete provisions, however, (IMHO) the most restrictive covenant is one relating to confidentiality or non-disclosure of confidential information. This is the only restrictive covenant that can last indefinitely, so long as the disclosed confidential information or trade secret remains valuable, protected confidential information to the employer. Disclosure of trade secrets can happen so easily, and regardless of whether it was intentional or not, it can and does injure businesses that work hard to protect their methods, data, client lists and other “secret sauces” that they may use to get ahead in the marketplace.
Restrictive covenants such as non-compete and non-solicitation clauses are governed by reasonable timelines and are not able to exist indefinitely. Legally, the courts presume RCs such as these are reasonable if effective for 6 months to 12 month after termination of the employment relationship. This does not mean that employers cannot require these provisions to remain binding for longer than 2 years, but in Florida, an enforcing party would have to make a very strong argument in order for the provision to be upheld.
And those are the basics, folks. Florida has a healthy body of case law relating to these issues because they are hotly contested and litigated often. Which can only mean one thing… an employment law attorney wasn’t consulted during negotiation of the employment agreement! (Just kidding. Sort of.)