On April 24, 2025, the Florida House and Senate passed legislation introducing large-scale changes to Florida’s non-compete landscape. The Florida Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth Act (the “CHOICE Act”) is expected to be signed into law by Governor DeSantis, and once signed, will take effect in the Sunshine State on July 1, 2025.
While many states have passed laws curbing the use of post-employment non-competes, the CHOICE Act goes the opposite direction by reinforcing employers’ ability to use restrictive covenants. Although Florida already has a statute (that remains in effect) governing non-compete agreements, the new soon-to-be-law makes sweeping changes, some of which will require further monitoring and likely need to be interpreted by the courts, as they seemingly contradict existing Florida law. Like any new statute, the real impact will be in enforcement and how the courts treat this new legislation.
Existing Florida Non-compete Law
Since the late 1990s, Florida has had a non-compete statute that created certain presumed valid and invalid restrictions. Most notably, it declared that restrictive covenants six months or less were presumed valid, and ones longer than two years were presumed invalid. Florida’s CHOICE Act will modify Florida’s statutory non-compete scheme, but will not completely square itself with the prior statute, as discussed below.
What the CHOICE Act Does
The CHOICE Act is broad spanning non-compete legislation that allows an employer to restrict an employee from taking competitive employment for up to four years, through either a garden-leave provision or a noncompete agreement.
Under a garden leave provision, an employee is not required to perform any work but still receives their salary and benefits in exchange for not accepting employment with a different employer. Essentially, the employer pays the employee to sit on the sidelines. In contrast, under a non-compete clause, an employee agrees not to compete without the promise of continued pay during the restricted period. The CHOICE Act permits garden leave of up to four years.
The CHOICE Act defines a “covered garden leave agreement” and a “covered noncompete agreement” as separate terms and includes different sections of the Act to cover each concept. Under the law, the terms are defined as follows:
“Covered garden leave agreement” means a written agreement between a covered employee and covered employer in which: (a) the employee and employer agree to up to, but no more than, four years of advance, express notice before terminating the employment or contractor relationship; (b) the employee agrees not to resign before the end of such notice period; and (c) the employer agrees to retain the employee for the duration of such notice period and to continue paying the employee the same salary and providing the same benefits that the covered employee received from the employer in the last month before the commencement of the notice period. The employer is not obligated to provide discretionary incentive compensation or benefits or have the employee continue performing any work during the notice period.
“Covered noncompete agreement” means a written agreement between a covered employee and a covered employer in which, for a period not to exceed four years and within the geographic area defined in the agreement, the employee agrees not to assume a role with or for another business, entity, or individual: (a) in which the employee would provide services similar to the services provided to the employer during the three years preceding the noncompete period; or (b) in which it is reasonably likely the employee would use the confidential information or customer relationships of the employer.
The CHOICE Act requires an employer to comply with a number of steps before it can utilize a garden leave agreement or a noncompete agreement. First and foremost, like many state non-compete laws enacted over the last few years, it requires that an employer provide notice. Here, at least seven days’ notice, which applies whether the covered agreement is entered into before or during employment.
Beyond the notice requirement, the CHOICE Act also requires that the employer notify the employee in writing that the employee has the right to consult with an attorney before executing the covered agreement. It further requires that the employee acknowledge in writing receipt of confidential information and/or customer relationships. Although somewhat vague, this likely means that the agreement contains a provision stating that during the course of employment, the employee will receive company confidential information and access to its customer relationships.
In addition, for a covered garden leave agreement, the CHOICE Act requires the contract include the following terms:
- After the first 90 days of the notice period, the employee does not have to provide services to the employer;
- The employee may engage in nonwork activities at any time, including during normal business hours, during the notice period;
- The employee may, with the permission of the employer, work for another employer during the notice period; and
- The garden leave agreement notice period may be reduced during the notice period if the employer provides at least 30 days’ advance notice in writing to the employee.
For a covered noncompete agreement, the employer is required to include the following language: “A covered noncompete agreement provides that the noncompete period is reduced day-for-day by any nonworking portion of the notice period, pursuant to a covered garden leave agreement between the covered employee and the covered employer, if applicable.”
Although not explicitly stated in the law, if a contract fails to include the required terms or if an employer does not provide the requisite notice period, the agreement is likely unenforceable.
Through the CHOICE Act, the Florida legislature has not incentivized employers to utilize garden-leave, as it requires employers to continue paying the affected employees, whereas the statute permits employers to use noncompete agreements without a continued payment obligation. While we expect that many commentators will focus on garden leave agreements, perhaps more attention needs to be given to the noncompete agreement as we anticipate this portion of the Act will be challenged by employees for a host of reasons, including the lack of additional consideration as a requirement, the failure to tie the noncompete to the protection of a legitimate business interest, and the presumption that a four-year post-employment noncomplete is valid.
Who it Covers
The CHOICE Act applies to employees and independent contractors that earn a salary greater than twice the annual mean wage of the county in which the employer has its principal place of business or, if the employer’s principle place of business is outside Florida, the county in which the individual resides.
There are a few open questions triggered through this section. First, how does the covered noncompete agreement square longstanding case law in Florida interpreting Chapter 542.335(d), which holds that post-term restrictive covenants greater than two years are presumptively unreasonable? The CHOICE Act does not abrogate either 542.335 or the Florida case law interpreting it. Rather, it purports to fill a “gap” for higher-paid employees, but 542.335 already covered these employees, leaving an open question as to how these two statutes (and existing case law) now square with one another. Second, how does the CHOICE Act apply to independent contractors if it requires the employer to pay a salary? Third, the CHOICE Act does not define “nonwork activities,” leaving an open question on what precisely is permitted through this portion of the Act. Fourth, the CHOICE Act does not explain whether an employee has a right to hold a position with a non-competitive employer under any circumstances or if the only right that employee has is subject to the employer’s sole discretion. All of these questions will be ripe for judicial review and will likely be the subject of lawsuits.
Compensation Requirements for Covered Garden Leave Agreements
The CHOICE Act also includes a salary floor of two times the annual mean wage, as most recently calculated by the United States Department of Labor (DOL) Bureau of Labor Statistics “for all occupations in” Florida. According to the DOL, the annual mean wage for Florida, as last calculated, was $62,990. Accordingly, the CHOICE Act will not apply to any worker earning a salary of less than $125,980 per year. The Act defines “salary” as annualized base compensation paid through a wage, salary, professional fee, or other compensation, but it does not include health care benefits, severance pay, retirement benefits, expense reimbursement, distribution of earnings or profits, or discretionary awards, tips, bonuses, or commissions (which are anticipated but indeterminable). Notably, though, while the definition of “annual mean wage” is discussed on a statewide basis, the definition of “covered employee” references the “annual mean wage” in terms of counties. Again, the statutory text seems to be contradictory and the question of which language in the Act applies will be one that is inevitably litigated.
Through the garden leave provision, a covered employer is required to provide the employee with the same salary and benefits the employee was receiving as of the last month before the commencement of the notice period, but the employer is not obligated to provide discretionary incentive compensation or benefits.
Remedies Available
Setting aside the four-year restrictive covenants, the Act’s most noteworthy section are the remedies available to employers in the event an employee breaches a lawful covenant. While the Act retains the courts’ ability to engage in fee-shifting in favor of the prevailing party, it makes substantial changes to Florida’s common law standard for obtaining an injunction. Generally speaking, in deciding whether to issue an injunction, courts have traditionally weighed the plaintiff’s likelihood of success on the merits, a showing of the plaintiff suffering irreparable harm without an injunction being issued, whether the injury to the plaintiff outweighs any damage the injunction would have on the other party, and a balancing of the equities. As such, granting an injunction has historically been viewed as an act of equitable discretion.
The CHOICE Act, however, seemingly eliminates this standard of review. Rather, now, in the event an employer seeks to enforce a covered agreement, a court is required to enjoin the employee and any business engaging the employee. A court may only modify or dissolve the injunction if the employee or their new employer demonstrate by clear and convincing evidence that: (1) the employee will not provide “any services similar to the services provided to the covered employer” during the three years prior to garden leave starting or the employee’s employment terminating or use the employer’s confidential information; or (2) the new employer is not engaged in and is not planning or preparing to engage in “any business activity similar to that engaged in” by the prior employer. Under the covered garden leave agreement, the injunction can also be dissolved upon clear and convincing evidence that the employer failed to pay salary and benefits as required and failed to cure this issue within a reasonable period.
Interestingly, despite an employer not being required to pay anything to an employee as part of a noncompete agreement, an employee may dissolve a preliminary injunction rendered under a noncompete agreement by demonstrating that the employer failed to pay consideration for the noncompete agreement and has not cured the failure after being provided a reasonable opportunity. No doubt that this discrepancy (seemingly requiring consideration to enforce the covered noncompete without requiring said consideration in the first place) will be tested in the courts.
Other Act Nuances
Finally, the Act contains a few additional nuances that are worth briefly examining. These include:
- An employee may only challenge an injunction utilizing nonconfidential information. Given that the Act requires the employee to prove no competition by clear and convincing evidence and further requires the employee or subsequent employer to prove they have no plans to compete, this seems like it will be difficult to establish.
- An employer is permitted to reduce salary or benefits if the employee engages in “gross misconduct.” However, this term is undefined. Further, this section appears to permit the employer to reduce the benefits prospectively and without court order, but not statutorily providing an employee with any means of relief and seemingly without giving the employee the right to challenge an injunction on this basis.
- The Act purports to eliminate conflicts of law in favor of the Act. In other words, if litigation were to arise between a Florida employer with a California employee, the CHOICE Act would seemingly pre-decide that the Act still governs.
Key Takeaways
- The short and long-term impacts of this Act are hard to gauge, as the Act will inevitably be subject to intense judicial scrutiny. Employers may wish to initially proceed with caution, as there will no doubt be lawsuits challenging some or all of the provisions contained within this Act.
- Those employers that do decide to revamp their restrictive covenant programs to adopt the options available to it under the Act should make sure to abide by the notice requirements and be mindful of the required income thresholds. Additionally, while the Act seemingly has an inherent discrepancy regarding the annual mean wage, employers should err on the side of caution and ensure that any employees they wish to be bound to a covenant under the statute make the higher figure between the annual mean state wage and the annual mean county wage.
- Despite the Florida legislature removing judicial discretion in awarding injunctive relief, employers should still consider their legitimate business interests and craft a non-compete program accordingly, irrespective of whether it covers four years or less. At the end of the day, issues exist in the text of the CHOICE Act, and employers may decide that seeking restrictive covenants less than four years are in its best business interests, but that determination can only be decided by conducting a meaningful analysis of what steps are necessary to protect a company’s trade secrets, confidential information, and customer relationships.
