The FTC’s Non-Compete Ban: What Florida Businesses Need to Know

Florida businesses have long relied on non-compete agreements to protect their confidential information and customer relationships. However, the recent ruling by the Federal Trade Commission (FTC) throws a wrench into this practice. The FTC’s new rule, which is set to take effect later this year, effectively bans most non-compete agreements nationwide. This poses a significant challenge for Florida businesses accustomed to these protections under state law.

Understanding the Impact

The FTC’s rule prohibits employers from entering into non-compete agreements with most employees. This includes not only new hires but also existing employees who may have signed non-compete agreements in the past. The rule also requires businesses to rescind any existing non-compete agreements and notify affected employees that these agreements are no longer enforceable.

For Florida businesses, this means they can no longer restrict former employees from working for a competitor, even if those employees possess valuable trade secrets or customer information. This could lead to concerns about employee mobility and potential knowledge sharing with competitors.

What Can Florida Businesses Do?

Although the FTC’s rule presents challenges, Florida businesses still have options to protect their legitimate interests. Here are some steps you can take:

• Non-Solicitation Agreements: Unlike non-compete agreements, non-solicitation agreements restrict employees from soliciting clients or co-workers for a set period after leaving the company. While these agreements don’t prevent employees from working for a competitor, they can help mitigate the risk of losing valuable customer relationships.
• Confidentiality Agreements: Confidentiality agreements, also known as non-disclosure agreements (NDAs), can be used to protect sensitive business information, such as trade secrets, from being disclosed by departing employees.
• “Garden Leave” Provisions: These provisions require a departing employee to remain on payroll for a set period without performing any work duties. This can buy the company time to find a replacement and mitigate the risk of knowledge transfer during the transition.

Moving Forward

The FTC’s rule on non-compete agreements is significant and will require Florida businesses to adapt their employment practices. Consulting with an experienced employment law attorney is crucial to ensure your business is compliant with the new rule and has effective strategies in place to protect its confidential information and customer base.

The Frazer Firm has a team of experienced employment law attorneys who can help your business navigate the changing legal landscape. Contact us today to schedule a consultation.