In medieval times, the economy relied on apprenticeships to graduate craftsmen into the workforce. A master would agree to train an apprentice in exchange for low-wage labor for a few years to help the apprentice learn the trade. At the end of the period, the apprentice graduated and was considered a journeyman. To maintain control of the market, the master might want to prevent the journeyman he trained for years from practicing the craft within a certain area.
This was called a noncompete, and generally, courts did not enforce the agreement, especially after the Black Death plague in the 14th century, which caused huge labor shortages. The courts shifted their thought in the 1700s, granting that partial restraints on trade might be enforceable and important to the economy. Today's judges are much more open to enforcement, but the noncompete clause must meet certain conditions..
What is a noncompete agreement?
A noncompete contract "is a contract between two parties, where one party agrees not to compete with the other for a period of time." According to John Sanchez in the Nova Law Review, "(w)hile several states continue to ban such restrictive covenants, most states, Florida included, generally enforce noncompete agreements in employment."
When it comes to healthcare, professionals in the field often rely on non-compete agreements for many reasons. Most commonly, it is between an employer and employee, where the employed doctor agrees not to provide services to a particular patient-base within a certain area for a specific period of time.
Items to include in a noncompete contact:
- Agreement effective date and specific time frame for the agreement
- Reasons for the agreement
- How will the noncompeting party be compensated (called "consideration")
- Parties under the noncompete agreement
- Specific geographic area for the agreement, a particular state or distance from a named city--The geographic area must be reasonable considering the protected party's market.
- A list of the conditions the noncompeting party agrees to uphold for the time period of the agreement
Before having an employee sign a noncompete agreement, you should encourage that person to speak to an attorney of his or her own. This ensures each party has adequate representation in the contract.
Find an agreement that lets both parties move forward without compromising each other's interests
Do not attempt to draft a noncompete contract without experienced legal advice. Florida judges tend to be more willing to enforce such agreements when the restrictions are reasonable to protect the interests of both parties and are not too restrictive. When you can reach an agreement without litigation, it is better for your business.