Over the past several years, EmployNews has chronicled multiple legislative, regulatory, and judicial assaults on the use of noncompetition agreements with employees. These attacks have weakened or eliminated employers' ability to require these agreements in both red and blue states. On July 1, a new Florida law takes effect that contradicts these efforts, resulting in the most employer-friendly noncompete rule in the U.S.
Florida already has one of the most permissive noncompete statutes in the country. The new law expands this principle, giving employers the ability to use noncompetes while leaving workers with limited options for trying to evade their enforcement. The new law only applies to workers who earn at least twice the annual wage of the county where the employer is located. This definition excludes bonuses, commissions, or other incentive compensation. Qualified workers can be placed under noncompetes of up to four years in length. The law does not apply to health care workers.
If employers include language in the noncompetes required under the statute, state courts are directed to issue preliminary injunctions upon request from employers without the usual imminent harm standard usually required for such decisions. Instead, employees must show that the noncompete is invalid through an elevated burden of proof. Most importantly, if an employee unsuccessfully challenges their noncompete, they must pay the employer its fees and costs incurred in defending the lawsuit, in addition to any actual damages suffered. This fee shifting provision will likely deter many workers from attempting to violate or challenge their noncompetes.
The new law also allows employers to use garden leave arrangements with employees to sideline them from working for a competitor for up to four years if they continue salary and benefits. For employees and agreements not covered by the new law, the previous statute applies, with its already favorable terms for employers.
Companies outside of Florida may be tempted to use a Florida governing law provision to try to take advantage of this new law. For employees who work outside of Florida, those states are unlikely to honor a Florida choice of law provision when it contradicts their own statutes and common law requirements for noncompetes. However, companies with qualifying Florida workers will have powerful new tools available to restrict the post-employment activities of employees willing to agree to such terms.
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