Let’s talk about Florida’s CHOICE!
Not that kind of choice, mind you; we wouldn’t spring that on you on an otherwise-lovely weekday morning. No, we’re here to talk about the Florida Legislature’s Latest foray into tortured acronyms: the “Florida Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth” – “CHOICE” – Act.
The CHOICE Act is set to take effect on July 1, 2025, pending Governor DeSantis’ signature. In short, the CHOICE Act is poised to make Florida the single most restrictive covenant-friendly state in the entire nation – take that, Texas and Delaware!
If you’re reading this, you’re almost certainly familiar with restrictive covenant agreements, though you might know them better by their colloquial name: non-compete agreements. News junkies like yourselves – i.e. the kind of person who subscribes to a labor and employment firm’s newsletter – doubtless remember the Federal Trade Commission’s (“FTC”) recent ill-fated attempt to ban non-competition agreements nationwide.
While these efforts were thwarted by none other than the Eastern District Court of Texas, a majority of states already have at least partial restrictions on how far such agreements can go, imposing limits as to duration, proximity, or even who can or cannot be bound by a non-compete agreement at all. Even Florida generally limits non-compete agreements to apply only to cover legitimate business interests with a maximum 2-year, reasonable geographic radius.
Under the CHOICE Act, however, even these relatively minor limitations would be stretched to their breaking point. CHOICE would remove all restrictions associated with geographical scope and extend the maximum 2-year duration to 4 years. Beyond that, under CHOICE, preliminary injunctive relief for the employer for any violation is both mandatory and automatic, unless the (former) employee provides clear and convincing evidence 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 within the restricted territory.
In plain English, under CHOICE, non-competition agreements in the State of Florida will be expanded beyond their already generous scope to include more employees, more geographical regions, and more time. Not only that, but they will also become infinitely easier to enforce, with all burdens associated with enforcement being placed upon the employee, rather than the employer. The new standard effectively puts the onus on the former employee to prove they didn’t violate the agreement.
Here’s where things are bound to get complicated: the CHOICE Act governs employees who leave the State of Florida for greener pastures, including places where non-compete agreements are banned – like California – or even criminalized – like Colorado. We’re eagerly awaiting to see what happens when a Colorado resident receives a cease-and-desist letter from their former Florida-based employer, but in the meantime, the CHOICE Act seeks to impose Florida’s employer-friendly regime on each and every State in the Union. We’d say, “good luck with that,” but given how much success Texas has had doing just that lately, our money is on Florida courts getting their way.
The new standard comes with new requirements, which amount to specific language that must be included in all non-competition agreements moving forward; not exactly a high bar to clear. The CHOICE Act shall apply where:
the employee 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;
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;
the employee acknowledges in writing receipt of the employer’s confidential information and/or customer relationships;
the noncompete period does not exceed four years; and
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.
Don’t get too distracted by that last prong. “Garden leave” is a privilege reserved for the top 1% of C-suite executives, and literally nobody else. It represents a situation where an employee receives regular wages in exchange for not competing for the duration of the agreement. Since there’s no requirement to provide garden leave, rest assured that 99.99% of all restrictive covenant agreements moving forward shall remain standard the non-compete agreements you’re already familiar with. The CHOICE Act does technically make those agreements easier to enforce as well, but again, it’s not something you’re ever likely to encounter in real life, so we’re not going to spend time here on them. If it applies to your business, please call us!
What’s important for our purposes are the first four requirements, which amount to: (1) a new salary-threshold for a non-compete agreement; (2) a written agreement with a 7-day consideration period; (3) a clause to the effect of “Employee acknowledges that they will have access to Employer’s confidential information and/or customer relationships, and; (4) a maximum duration of 4 years. Bear in mind that these requirements only apply to the new CHOICE Act provisions; the standard, run-of-the-mill 2-year / reasonable geographic restriction agreements non-compete agreements you know and love will continue to function as they always have.
Suffice to say, if Governor DeSantis signs this legislation – which he is rumored to do - this is fantastic news for employers, and a sad day for employees. For our part, we continue to prefer the less restrictive “non-solicitation & non-acceptance” approach, but even we may need to reconsider in light of Florida’s CHOICE Act. We are here if you need more information or would like to review your current agreements once this proposed legislation becomes law in Florida.