On April 24, 2025, the Florida Legislature passed the Florida Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act, significantly expanding the enforceability of noncompete laws in the state. Although Governor DeSantis has not signed the bill into law, it is expected that he will soon, and the law will be effective July 1, 2025. Employers are encouraged to immediately review their noncompete agreements and existing practices in light of the bill’s major additions to the current legal landscape.
Background
In Florida, employers commonly enter into noncompete/nonsolicitation agreements with their employees to protect their trade secrets, confidential information, and relationships with prospective or existing customers. Such agreements are governed under section 542.334, Florida Statutes, which provides a list of factors that courts may consider in evaluating the agreement’s enforceability. To enforce a restrictive covenant agreement, employers must demonstrate that the agreement protects one or more legitimate business interests. Generally, the courts will examine whether a restrictive covenant agreement is reasonable in duration and geographic scope. Under current law, a court must presume that a restrictive covenant with an employee is reasonable if it is six months or less in duration, and unreasonable if more than two years in duration. Florida courts tend to enforce restrictive covenant agreements that are narrowly tailored to protect specific business interests without unduly preventing an employee’s ability to work.
The New Bill Adds to the Existing Legal Landscape
The CHOICE Act reflects the Florida Legislature’s determination that alternative means of protecting confidential information and client relationships, such as nondisclosure agreements, fixed-duration term contracts, and nonsolicitation clauses in employment contracts, are inadequate to protect against the risks faced by companies in Florida. The Legislature expressly noted that “predictability in the enforcement of contracts . . . encourages investment in this state.”
The CHOICE Act defines “covered employee” as any employee or contractor who earns a salary greater than twice the annual mean wage of the county where the Florida employer has its principle place of business, or the county where the employee or contractor resides if the employee or contractor works for a non-Florida based business. While the CHOICE Act’s salary requirement will vary from county to county, the new law will not apply to lower wage workers. Significantly, the Act applies to nonresidents employed by a Florida-based employer. Notably for healthcare companies, the Act excludes from its definition healthcare practitioners as defined in section 456.001, Florida Statutes.
The bill governs two types of contractual provisions: (1) a covered garden leave agreement and (2) a covered noncompete agreement.
Covered Garden Leave Agreement:
A “garden leave” agreement is an arrangement where the employer and employee agree to a period of time where the employee is not required to work, but still receives a salary in exchange for not working elsewhere. The CHOICE Act provides for an enforceable garden leave agreement if:
(1) the employer advised the covered employee in writing of the employee’s right to seek counsel before the agreement’s execution and the employer provided the employee at least seven days to review the agreement;
(2) the time to provide advance express notice of termination (the notice period) does not exceed four years;
(3) the employer agrees to pay the employee’s regular base salary and benefits during the notice period; and
(4) the covered employee acknowledges in writing the employee’s receipt of employer’s confidential information and/or customer relationships.
In regard to the last requirement, which is extremely important for employers in any later filed enforcement action, the court must presume that the employee/individual contractor had access to the employer’s confidential information and/or customer relationships if the employee/individual contractor acknowledged such access and/or receipt of same in the agreement. The CHOICE Act also expressly provides that the employer is not obligated to provide discretionary incentive compensation or benefits or require the employee to perform any work during the notice period. The garden leave agreement must provide that, 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; and the employee may work for another employer for the remainder of the notice period only if the employer permits.
Covered Noncompete Agreement:
The CHOICE Act provides that noncompete agreements will be enforceable if:
(1) the employer advised the employee in writing of the right to seek counsel before the agreement’s execution and provided the employee at least seven days to review the agreement;
(2) the employee acknowledges in writing receipt of the employer’s confidential information and/or customer relationships;
(3) the noncompete period does not exceed four years; and
(4) the noncompete period is reduced day-for-day by any nonworking portion of the notice period, pursuant to a covered garden leave agreement, if applicable.
The covered noncompete agreement differs from existing noncompete law in that it expands the permissible duration to a maximum of four years and contains no limitation on geographic scope. In other words, noncompete agreements can now last two years longer and extend to employees who move out of state rather than remain in Florida.
Enforcement Provisions
The CHOICE Act marks a significant departure from current enforcement proceedings in Florida. Under the CHOICE Act, if an employer believes an employee has breached a covered agreement, the employer can apply for a preliminary injunction – which the court must issue. The court order prohibiting the employee and/or new employer from continuing the employment relationship is automatic and must be issued by a court without the prior employer proffering any evidence. After a preliminary injunction is entered, the court may only modify or dissolve the injunction if the covered employee (or subsequent employer) proves by clear and convincing evidence based on nonconfidential information that: the employee will not perform similar work during the restricted period or use confidential information or interfere with customer relationships; the covered employer failed to pay the salary or benefits required under a covered garden leave agreement, or failed to provide consideration for a covered noncompete agreement; or the subsequent employer is not engaged in, or preparing to engage in, a similar business as the covered employer within the restricted geographic area.
The CHOICE Act further provides that if the covered employer has its principal place of business in Florida and uses a covered agreement with a Florida choice of law provision, then “if any provision of this section is in conflict with any other law, the provisions of this section govern.” The applicability of the Florida choice-of-law provision for nonresident employees remains to be seen. It is anticipated that employees of other states which either ban or limit noncompete agreements will challenge the enforceability of the Florida choice-of-law provision in an enforcement proceeding.