How Does Florida’s CHOICE Act Affect Noncompete Agreements?

At the federal and state levels, a great deal of discussion has taken place over the past couple of years about the proper scope of noncompete agreements. In the prior presidential administration, there was even guidance from the Federal Trade Commission that might have virtually ended the enforcement of noncompete agreements nationwide. However, implementation of that rule was blocked in court, and it seems that the current administration might give up on any noncompete ban. 

Meanwhile in Florida, the CHOICE Act has considerably bolstered the potential effectiveness of some restrictive covenants within the state. It applies when an employee earns, or is expected to earn, twice the median income for the Florida county in which the employer is located. For employees of companies from outside the state, the median wage of the Florida county where the worker lives is used. This act covers both noncompete agreements that apply after a worker’s employment has concluded, as well as “garden leave” arrangements for employees who are still being paid, but are no longer coming to work as they transition out of their job.    

Previously, Florida law mandated that three core elements be established for a noncompete agreement to be enforceable: a written agreement signed by the employee; a legitimate business reason for the restriction and reasonable limitations on time, geographic scope and business constraints. Typically, courts evaluated these factors meticulously, balancing the employer's interests against the employee's right to earn a livelihood. These standards still remain in force during situations where the CHOICE Act does not apply. 

For cases where the CHOICE Act is in effect, the enforceability of both garden leave and noncompete agreements will now be presumed as long as legal requirements are satisfied and the duration is no longer than four years. The legal burden shifts to a current or former employee to prove that such agreements are unenforceable. This legislative change significantly alters the dynamic of restrictive covenant litigation, potentially deterring employees from contesting agreements and bolstering employers' positions in disputes. Furthermore, the Act directs courts to issue preliminary injunctions to prevent covered employees from violating restrictive covenants, reinforcing employers' ability to protect proprietary interests during litigation.  

H. Clay Parker, Esq. The Florida Lawyer handles various issues relating to restrictive covenants in noncompete and garden leave agreements. For a consultation regarding your particular needs, please call our firm at [ln::phone] or contact us online. Our office is in Orlando.