As more and more states move to curb the use of non-compete agreements and similar restrictive covenants, Florida’s newly-signed CHOICE Act will make it the most non-compete-friendly state in the country.
The important details: The new law makes non-compete and garden leave agreements enforceable for higher-earning workers for up to four years post-employment and eases employers’ ability to obtain court orders to enforce such agreements.
The CHOICE Act: Effective July 3, the Act applies to non-compete and garden leave agreements and generally broadens their enforceability.
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Who is covered? The law applies to employees and contractors making more than twice the annual mean wage in the Florida county where they work or where the employer’s principal place of business is located.
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Applying this measure, the income threshold range is approximately $80,000 to $150,000.
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While the CHOICE Act does not apply to licensed healthcare practitioners, employers in Florida may still use non-compete agreements for workers who earn below the income threshold or are licensed healthcare practitioners, as permitted under existing state law. However, the CHOICE Act provisions do not apply in these cases.
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What agreements are covered? The law applies to non-compete and garden leave agreements, provided they meet certain requirements, including:
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Agreements must be in writing and provide workers with at least seven days to review and notice of the right to retain counsel.
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For garden leave, agreements must not require the worker to continue providing services after the first 90 days of the notice period.
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Longer enforcement time period: Under the law, agreements can extend to up to four years post-employment. Most other state laws cap this period at two years or less.
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Extra enforcement: The law provides employers new tools for enforcing non-compete and garden leave agreements – usually a difficult endeavor in most jurisdictions.
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The law requires courts to immediately issue injunctions against workers allegedly violating non-compete or garden leave agreements.
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Courts may only rescind the injunction if the worker can prove by clear and convincing evidence that the individual’s actions do not or will not violate the agreement, among other proofs.
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Where the worker has engaged in “gross misconduct” against the employer, the employer can reduce the salary or benefits of the worker during the notice period of a garden leave.
Employer Takeaways:
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Employers with operations and/or workers in Florida should review their restrictive covenants and, to the extent possible, tailor them to qualify for the CHOICE Act’s employer-friendly provisions.
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While more restrictions on non-compete agreements continue to trend at the state level, the CHOICE Act may inspire some jurisdictions to follow suit and allow for broader non-compete agreements for higher-earning workers.
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Looming over all state non-compete developments is the very real possibility of a bipartisan federal law, although it is unlikely that any federal law will fully preempt all state laws in this area.
