Now Hiring: Are Growing Florida Solar Businesses Properly Using Restrictive Covenants to Protect Their Confidential Information?

Ensure that your non-competition agreements with your solar employees are fully enforceable.

The solar industry is beginning to take off in the Sunshine State. Florida added 1,700 solar jobs in 2016, making it the fifth largest solar employment market in the United States according to the 2016 Solar Jobs Census, and the state is well-positioned for continued growth.

While growth in the solar industry is an overall positive trend, Florida’s solar employers should be aware of certain growing pains as they participate in this expanding market. In particular, employers should be mindful of the right (and wrong) ways to protect and preserve their valuable customer relationships and hard-won confidential information.

Employers in Florida’s strong solar market should use restrictive covenant agreements as part of, or in addition to, their employment agreements to greatly reduce the risk that an employee will misappropriate valuable company assets like customer lists or other confidential information.

Restrictive covenant agreements typically include provisions that:

  • Require confidentiality as to company information and trade secrets;
  • Prohibit competing with the company while employed or for a period of time after the employment relationship ends; and
  • Prohibit soliciting the company’s employees or customers for a competitor’s benefit.

Unlike in most areas of contract law, where the parties to a contract are free to agree to whatever terms and conditions they like, the majority of states impose restrictions on the scope and extent of permissible restrictive covenants in an employer–employee relationship. These laws vary widely from state to state and, moreover, change from time to time. Consequently, employers should avoid using one-size-fits-all form agreements found on the internet. Further, employers that rely on restrictive covenant agreements to protect their valuable customer relationships and confidential information should always consult with an attorney to ensure that the restrictive covenants that the company is using or intends to use comply with applicable law and are fully enforceable.

If you are using a restrictive covenant agreement with Florida employees, you should check to see if it addresses these common enforcement issues:

  • Does it preclude the employee from raising the employer’s alleged prior breach as a defense to the enforcement of the restrictive covenant agreement?
  • Does it provides for a tolling of the restrictive period during any time when the employee is in breach of the restrictive covenant agreement?
  • Does the agreement have the requisite language to ensure its enforceability by the employer’s successors or assigns?

Additionally, employers should ensure that any agreement requiring confidentiality includes the mandatory language required by the Federal Defense of Trade Secrets Act, which became law in 2016. These and a number of other considerations are necessary parts of enforceable confidentiality, non-competition, and non-solicitation agreements.

As the solar industry continues to grow, employees will experience more and more temptation to seek to capitalize on their employers’ confidential information or customer relationships. Now is the time to ensure that your business assets are protected.

This guest blog post is courtesy of Brad deBeaubien and  Jan Pietruszka, attorneys in the Employment Law Practice Group at Shumaker, Loop & Kendrick, LLP. For questions about your solar business’s restrictive covenant agreements, or any other employment law issues, please contact Shumaker’s Employment Law Group.