By: Laurie A. Thompson
As Published in the Daily Business Review on May 8, 2025
On April 24, 2025, the Florida Legislature passed a bill that significantly changes the law relating to the enforcement of Non-Compete Agreements against certain highly paid employees. The "Florida Contracts Honoring Opportunity, Investment, Confidentiality and Economic Growth Act ("CHOICE" Act) is expected to be signed by Governor DeSantis and will result in the reshaping of the enforcement of the state's law relating to restrictive covenants for certain employees beginning on July 1, 2025.
Background
In September 2024, the Federal Trade Commission Rule against non-compete agreements was set to take effect to promote competition by banning non-compete agreements nationwide ("FTC Rule"). Pursuant to the FTC Rule, non-compete agreements for most workers would no longer be enforceable. The FTC's stated aim was to promote a more competitive labor market, foster innovation, empower workers and protect consumers. The underlying justification was the belief that these agreements stifle competition in the labor market, hinder new business formation and ultimately harm workers and consumers. While the FTC recognized that employers had legitimate concerns regarding the protection of their trade secrets and recouping training investments, it found there were less restrictive means that employers could use to protect those interests, such as non-disclosure agreements, non-solicitation agreements and fixed term employment contracts.
However, a federal court in Texas issued a nationwide injunction against the FTC Rule and subsequent appeals by the FCT remain on hold. Accordingly, as of now all existing non-compete agreements are still enforceable in Florida, and because the FTC's leadership has changed as a result of the 2024 Presidential election, there is a chance that the FTC might withdraw or significantly modify the FTC Rule rather than continue defending it in court.
Against this background, Florida passed a law regarding non-compete agreements in 2024. The key change brought about by the 2024 law was that there is no longer a limitation on the geographic scope of a non-compete agreement. The 2024 law strengthened the ability to enforce non-compete agreements, particularly those entered into after July 1, 2024. After the passage of the 2024 law, Florida arguably became the "friendliest" state for enforcing non-competes, with no restrictions on geographic scope. In fact, some states such as California, Colorado, Minnesota, North Dakota and Oklahoma have gone in the opposite direction from Florida and have near or total bans on non-compete agreements.
The CHOICE Act
The CHOICE Act builds on the changes made by the 2024 law and creates a presumption that "covered" non-compete agreements and "covered" garden leave provisions are enforceable and do not violate public policy. In direct contradiction to the findings made by the FTC in support of the FTC Rule, the Florida legislature made legislative findings that the alternative means identified by the FTC were "inadequate to protect against the significant global risks faced by companies in this state."
The CHOICE Act requires courts to issue an injunction unless the former covered employee or poaching employer can prove the new employment will not result in unfair competition. Essentially, for "covered" agreements the CHOICE Act makes it much easier for an employer to obtain a preliminary injunction. The employer no longer has to prove that the restraint is reasonably necessary to protect the legitimate business interests justifying the restriction. Rather, if the agreement meets certain criteria a judge must enter an injunction and may modify or dissolve an injunction only if the covered employee or prospective employer – proves by clear and convincing evidence based upon non-confidential information that:
- The employee will not perform similar work during the restricted period or use confidential information or customer relationships;
- The employer failed to pay the salary or benefits required under a covered garden leave agreement, or failed to provide consideration for a non-compete agreement, after the employee provided a "reasonable opportunity" to cure the failure; or
- The prospective employer is not engaged in or preparing to engage in a similar business as the covered employer with the restricted territory.
These changes to enforcement do not apply to all non-compete and gardening provisions in employment contracts. The CHOICE Act defines a covered non-compete agreement as a written agreement, or a portion of a written agreement between a covered employee and a covered employer in which, for a period not to exceed 4 years and within a specified geographic area, which may be global in scope, the covered employee agrees not assume a role with or for another business, entity or individual:
- In which the covered employee would provide services similar to the services provided to the covered employer during the 3 years preceding the non-compete period; or
- In which it is reasonably likely the covered employee would use the confidential information or customer relationships of the covered employer.
A covered garden leave agreement is defined as a written agreement, or part of a written agreement between a covered employee and a covered employer whereby they agree:
- For up to, but no more than, 4 years of advance, express notice before terminating the employment or contractor relationship;
- The covered employee agrees not to resign before the end of such notice period; and
- The covered employer agrees to retain the covered employee for the duration of the notice period and to continue paying the covered employee the same salary and providing the same benefits that the covered employee received in the last month before the commencement of the notice period.
The CHOICE Act defines a "covered employee" as any employee or contractor who works primarily in Florida or works for an employer with its principal place of business in Florida who earns or is reasonably expected to earn a "salary" greater than twice the annual mean wage of either:
- The county where the employer has its principal place of business; or
- The county where the employee resides if the employer's principal place of business is not in the state.
"Salary" does not include discretionary incentives or awards such as bonuses or commissions. Also a person who is classified as a "healthcare practitioner" under Florida law is excluded from the definition of a "covered employee." Accordingly, these changes will not apply to certain healthcare practitioners or to lower paid employees but rather, will only affect employees who are more highly paid. For example, the "annual mean wage" in Broward County is $61,748. Accordingly, in order for an employee to be a "covered employee" in Broward County he or she would be required to make more than $123,496.00 a year in salary. Non-compete agreements against non-covered employees or based upon non-compete agreements that do not contain the language or notice required by the CHOICE Act are still enforceable under Florida's current non-compete law set forth in Fla. Stat. § 542.335 and require an employer to show that enforcement is required by a legitimate business interest that irreparable harm exists.
A covered non-compete agreement is fully enforceable according to its terms provided that:
- A covered employee was advised, in writing, of the right to seek counsel prior to execution of the covered non-compete agreement and was provided with proper notice;
- A covered employee acknowledges, in writing that in the course of his or her employment he or she will receive confidential information or customer relationships; and
- A covered non-compete agreement provides that the non-compete 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.
Similarly, a covered garden leave agreement is fully enforceable according to its terms, if the following requirements are met:
- A covered employee is provided proper notice of the covered garden leave agreement before its execution; and
The covered garden leave agreement provides that:
- After the first 90 days of the notice period, the covered employee does not have to provide services to the covered employer;
- The covered employee may engage in no work activities at any time, including during normal business hours, during the remainder of the notice period; and
- The covered employee may with the permission of the covered employer, work for another employer while still employed by the covered employer during the remainder of the notice period.
A Lot Can Change In A Year
A year ago employers were facing the possibility that almost all noncompete agreements would be unenforceable as a result of the FTC Rule. But given the nationwide injunction regarding the FTC Rule and Florida's aggressive protection of employers' ability to enforce certain noncompetition agreements, employers are dealing with a whole new world. Unlike the Federal Trade Commission and several states that have taken a more employee-centric approach, Florida has opted to enhance protections for employers by strengthening the enforceability of certain non-compete agreements, placing less emphasis on concerns about potential impacts on innovation, entrepreneurship, and economic growth. If the CHOICE Act is signed into law by Governor DeSantis as it anticipated, Florida will certainly be the most enforcement friendly state in the country for non-compete agreements. Time will tell whether that is a good or a bad thing for businesses and the residents of Florida.
Laurie A. Thompson is a Shareholder in the Labor & Employment and Commercial Litigation Practice Groups at Fowler White where she represents employers on a full range of employment employment-related matters and disputes, including FLSA violations, enforcement of non-compete agreements, human resources policies and procedures, workplace privacy and social media issues, compliance with statutory and regulatory requirements, internal investigations, compliance, and litigation avoidance strategies. Laurie can be reached at lthompson@fowler-white.com.