Non compete agreements after the recent FTC rule with Attorney Travis Hollifield
Attorney Tom Olsen: Travis, I was reading a paper today about non-compete agreements. Can you bring us up to speed with what's new with those?
Attorney Travis Hollifield: Well, non-competition agreements or agreements that limit a worker's ability to work in a competitive environment from their current employer is a very hot topic right now because there have been some rules coming out from various federal agencies that seem to suggest that the pendulum is swinging towards non-enforcement of those agreements. Now this is all very in its nascent or an early process that I'm sure is going to be challenged in the courts.
Non-competition agreements in Florida are subject to a Florida statute, a law that requires that an employer, in order to enforce a non-compete, has to prove up what's known as an LBI, which is short for a legitimate business interest, that would support the enforcement of the non-compete. If the agreement is just simply a restriction on competition with no legitimate business interest supporting the enforcement, then courts are not required to enforce those agreements.
Tom: The new law that came out, if you want to call it law, it was through the Federal Trade Commission.
Travis: That's right.
Tom: Not through our legislative body, not through an act of our president, but the FTC. I thought that was so odd that that even got on their radar and that they would make a move on this kind of thing.
Travis: Agencies, as you know, federal agencies, many of them do have rule-making authority. Whether that's appropriate or not is going to be a hot topic in the U.S. Supreme Court jurisprudence in the coming year in and of itself. Certainly the FTC, Federal Trade Commission, and other federal agencies have rule-making authority. This FTC, under the current administration, has taken the position that non-competition agreements are not good for the economy. It decreases employee mobility. It decreases competition in our allegedly free enterprise system. Therefore, they've taken the position that, except in rare circumstances, that non-competition agreements should not be enforced.
Tom: I would tend to agree with them on that, but otherwise it's up to the state, individual state law. I know in California they do not allow non-compete agreements at all, flat out, period.
Travis: That is 100% correct. In California, they are not permitted, but in Florida they are, pursuant to the Florida state statute and the employer's proof of a legitimate business interest to support the enforcement of the agreement.
Tom: If somebody in Florida were to tomorrow say that I've got a non-compete agreement based on what the FTC has just done, I'm going to go to court, and I'm going to challenge it and hopefully the court will strike it down, is that going to happen or not?
Travis: It can. What I'm hearing from some of my colleagues about this particular issue is that what an employee can do if they're faced with a lawsuit from an employer, is that the defendant employee can actually try and take it to the FTC or take it to an agency similar to that to allow the government an opportunity to intervene in the lawsuit and try and make the position known that this agreement should not be enforced.
Tom: Hey, folks, my guest today is Attorney Travis Hollifield. He's an employment law attorney in the Winter Park. He represents clients throughout the state of Florida. My name is Tom Olsen. The name of the show is Olsen on Law. We're going to take a break. We'll be back in just a few minutes.
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