A new Florida law that took effect July 1 gives employers more power to extend and enforce noncompete agreements — but only for employees earning more than twice the average wage in their county. The law also places stricter limits on those employees’ ability to work for competitors or be hired by rival companies.
The new rule called the Florida Contracts Honoring Opportunity, Investment, Confidentially and Economic Growth (CHOICE) Act allows an employer to extend noncompete agreements from two to four years, restricting an employee from working for competitors during that period, typically within a specified geographic area.
The rule divides those who view it as a pro-business measure and employee advocates who have argued that noncompete agreements stifle free and fair trade.
“[The CHOICE Act] arises out of the Legislature’s pro-business philosophy to make Florida a more attractive state for businesses,” said Fort Myers attorney Scott Atwood, shareholder with Henderson, Franklin, Starnes & Holt P.A. and chair of the firm’s Employment Law Group.
Washington, D.C.-based research organization Economic Innovation Group argues strict enforcement of noncompete agreements has been shown to reduce wages, new patents and jobs created by new businesses.
In a letter dated May 13, the group urged DeSantis to veto the CHOICE Act along with a coalition that includes the Florida National Employment Lawyers Association and professors at academic institutions, including University of Miami School of Law, Florida State University College of Law and University of Florida Levin College of Law.
“[The CHOICE Act] heavily shifts the legal landscape of noncompete agreements in favor of corporate interests and against workers, consumers and budding entrepreneurs,” the letter reads. “[It] would distinguish Florida as having the most starkly antiworker noncompetes regime in the nation.”
The CHOICE Act is limited in scope because it targets executives or people who make six-figure incomes, Atwood explained. It only applies to those who “earn or (are) reasonably expected to earn” more than twice the annual mean wage in the Florida county where they are based.
The new law also excludes health care workers, so doctors and other high-earning health industry employees are exempt. It supplements but does not replace Florida’s already existing noncompete rules, which employers may continue using to create agreements with their employees.
According to the Economic Innovation Group, the new rule removes the requirement that employers must prove a “legitimate business interest” such as trade secrets, client relationships or specialized training provided to an employee to enforce a noncompete agreement.
And under the CHOICE Act, the mere allegation of a noncompete violation requires a court to order a preliminary injunction, stopping an employee from working for competitors while the case is litigated.
An employee would have to provide a higher standard of “clear and convincing evidence,” Atwood said, to end such an injunction.
Before an employee signs a contract under the new rule, it requires employers to notify their candidate in writing of their right to seek counsel about the clause and to give them seven days to review it.
A second part of the CHOICE Act, called a “garden leave” agreement, allows an employer to put an employee on leave for up to four years in which the employee is not allowed to resign or compete for other work without permission, but still receives their normal paycheck. However, the terms of that employee’s pay and benefits could be modified during that time, Atwood said. The term “garden leave” stems from the idea that the employee wouldn’t have much else to do during that period but tend to their garden.
Atwood expects pushback from employee advocates on the CHOICE Act who may argue that the rule violates antitrust rules.
“There are going to be all sorts of arguments about this statute and how it’s written and how it’s interpreted,” he said.
In an unusual path to becoming law, Gov. Ron DeSantis did not rule one way or another on the new legislation. Instead, he allowed it to become law without his comment or signature by default after 14 days, as required by state statute. The act passed in the Florida Senate 28-9 and in the House 91-21.
DeSantis’ office did not respond to an email requesting comment.
