On April 23, the U.S. Federal Trade Commission (FTC) voted 3-2 to issue a rule banning most post-employment noncompete clauses in employment contracts. The rule will be effective 120 days after publication in the Federal Register in the coming days, unless enjoined pursuant to a legal challenge (at least two have already been filed). If the new rule goes into effect, it will significantly impact Florida businesses. Even if it does not go into effect, it has impacted the perception of noncompete agreements for many, which may make enforcement more challenging in some cases.

Florida has a long-standing statute that allows for the enforcement of reasonable non-competition provisions to protect legitimate business interests. Many view Florida’s statute as favoring enforcement and as pro-employer. So much so that one New York judge called Florida’s noncompete law “truly obnoxious,” characterizing it as having a “nearly exclusive focus on the employer’s interests …” On the other hand, many businesses seeking to protect intellectual property, goodwill and client relationships have selected Florida to operate due to the protections provided by the noncompete statute. These Florida employers may need to turn to alternatives to protect their business if the FTC rule takes effect.

Overview of the Noncompete Rule