Employment Agreements and Non-Competes for eCommerce

By Paul S. Rafelson, Founder, Rafelson Law PLLC

What belongs in an employment agreement?

• Role, reporting line and location.
• Compensation: salary, commission or bonus terms and any equity, with the conditions for each.
• Intellectual property. An assignment of what the employee creates in the role, such as designs, listings, photographs, copy and software. The brand enforces its photos and copy against copycats only if it owns them, and without a clear assignment the person who made them has the better claim. Several states, including California and New Jersey, limit what an employer takes and require notice of the limit in the agreement, so the clause has to match the state.
• Confidentiality, including supplier, listing and financial information. See NDAs and confidentiality.
• Restrictive covenants, covered below.
• Termination: notice, severance, return of property and what survives.
• Dispute resolution, including any arbitration clause. Federal law enforces most employment arbitration clauses, but not for warehouse or delivery workers who move goods in interstate commerce, and not for sexual harassment claims. The clause needs to say what happens in those cases.

Is the person an employee or a contractor?

How a worker is classified affects wages, taxes and who owns the work. The label in the contract does not decide it. The Fair Labor Standards Act looks at the economic reality of the relationship, and the Department of Labor’s guidance on the test has changed twice since 2021 and is changing again. The IRS applies a control test for payroll tax, and California, New Jersey and other states apply a stricter ABC test for wage and unemployment claims. In California, calling a contractor’s work a work made for hire makes the contractor an employee for workers’ compensation. The agreement has to pass every test applying to the state and the role. Copyright ownership of a contractor’s work depends on a signed written assignment or a qualifying work-made-for-hire agreement (17 U.S.C. §§ 101, 201(b), 204(a)). Where a team member designs or photographs for the brand, the agreement should say who owns the result.

Are non-competes enforceable?

It depends on the state. Some states void most non-competes (California, Bus. & Prof. Code § 16600), while others enforce a reasonable one that protects a legitimate business interest. Florida enforces non-competes under two statutes. Fla. Stat. § 542.335 requires a signed writing and a legitimate business interest, presumes an employee restraint of 6 months or less reasonable and one over 2 years unreasonable, and governs every agreement outside the CHOICE Act. The CHOICE Act (Fla. Stat. §§ 542.41 to 542.45, effective July 1, 2025) covers an employee or independent contractor whose salary exceeds twice the annual mean wage of the Florida county where the employer is based, or where the worker lives if the employer is based elsewhere, not counting bonuses, commissions or other variable pay. It applies when the worker’s primary place of work is in Florida, whatever law the agreement names, or when a Florida-based employer’s agreement names Florida law. It allows a non-compete or garden leave period of up to 4 years. On the employer’s application a court must enjoin the worker, and the new employer, for the full period. The worker lifts the injunction only by proving with clear and convincing evidence, from nonconfidential information, one of three things: the new work is not similar, the employer stopped paying what the agreement promised or the new business does not compete in the agreed territory. To qualify, the employer must deliver the proposed agreement at least 7 days before the offer expires, advise the worker in writing of the right to seek counsel and obtain the worker’s written acknowledgment of access to confidential information or customer relationships. The prevailing party recovers attorney fees. A federal court in Texas set the FTC’s nationwide non-compete rule aside in August 2024 (Ryan LLC v. Federal Trade Commission, N.D. Tex.). In September 2025 the FTC dropped its appeal and accepted that ruling. The FTC still brings cases against specific non-competes under Section 5 of the FTC Act, but state law sets the rules. A non-compete tied to the sale of a business is generally reviewed less strictly than an employee’s. See selling an eCommerce business.

What are the alternatives?

• Confidentiality and trade-secret protection, supported by access controls.
• Non-solicitation of customers, suppliers and employees, where state law permits.
• IP assignment so the company owns the work.
• Notice periods and retention terms that reward staying.

Which side are you on?

Employers need agreements that fit the business and that a court is likely to enforce. Employees and key hires need to know what they are agreeing not to do, and whether the covenant is reasonable in time, geography and scope. A Florida employee or contractor offered a covered non-compete gets at least 7 days to review it and a written notice of the right to a lawyer. Use them. We act for both. We do not draft an agreement for one side and review it for the other in the same matter.

How do I get started?

Contact us. Tell us the role, the state where the person works and what you want the agreement to cover, and we will tell you whether we can help.

Paul Rafelson is admitted in Florida and New Jersey. Katie Dariano is admitted in New York. For a matter governed by another state’s law, or in another state’s courts, we bring in local counsel or seek admission as the rules require.

Frequently asked questions

Related pages

Sources and notes

• 9 U.S.C. § 1 et seq.; 17 U.S.C. §§ 101, 201(b), 204(a); Cal. Bus. & Prof. Code § 16600; Fla. Stat. §§ 542.335, 542.41 to 542.45 (CHOICE Act); Ryan LLC v. Federal Trade Commission, 746 F. Supp. 3d 369 (N.D. Tex. 2024) (FTC non-compete rule set aside).