Florida’s New CHOICE Act Authorizes Garden Leave, Makes 4-Year Noncompete Agreements Easier to Enforce

The Florida House and Senate recently passed the Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act by an overwhelming majority. The CHOICE Act will substantially reshape Florida noncompete law, requiring courts to issue injunctions for covered noncompete agreements of up to four years and expressly authorizing garden leave agreements that require up to four years of advance notice of termination of an employee’s employment.

HOW DOES THE ACT CHANGE FLORIDA’S EXISTING STRUCTURE FOR ENFORCING NONCOMPETES?

The CHOICE Act differs significantly from Florida’s existing restrictive covenant law in the following ways:

• Expressly covers both employees and independent contractors
• Authorizes noncompetes that last for up to four years after the employment or contractor relationship ends
• Does not require the geographic scope of the noncompete to be reasonable and does not otherwise place any limitation on the geographic scope of an enforceable noncompete, although the geographic scope still must be specified in the agreement
• Mandates preliminary enforcement by courts for covered agreements without a showing that the employee accessed or used confidential information during or after the employment relationship or used customer relationships for a new employer
• Places a high burden on employees who seek to modify or dissolve an injunction enforcing a covered noncompete or covered garden leave agreement
• Requires courts to preliminarily enjoin prospective new employers from working with a covered employee during the noncompete or garden leave/notice period
• Places a high burden on prospective new employers who seek to modify or dissolve an injunction enforcing a covered noncompete or covered garden leave agreement

To take advantage of the CHOICE Act’s employer-friendly noncompete law, an employer’s noncompete agreement must

• advise the employee in writing of their right to seek counsel prior to signing the agreement and provide the employee at least seven days to review the agreement before signing;
• include a written acknowledgement by the employee that in the course of their employment, the employee will receive “confidential information or customer relationships”;
• expressly state that the noncompete period will be reduced by each day of the employee’s non-working garden leave/notice period (if any); and
• include an agreement from the employee not to assume a role in which the employee would provide services to another company or individual similar to the services the employee provided during the three years preceding the termination date, or in which it is reasonably likely the employee would use confidential information or customer relationships of the covered employer.

WHAT ARE COVERED GARDEN LEAVE AGREEMENTS?

“Garden leave” agreements, which are not commonly used in Florida, are now expressly authorized under the CHOICE Act. Under a garden leave agreement, an employer and employee agree to provide advance notice before the employment is terminated. During the garden leave/notice period, which can last up to four years, the employer must continue to pay the employee’s same base salary and provide the same benefits but is not required to provide any discretionary incentive compensation (e.g., bonuses) or benefits.

For the first 90 days of the garden leave/notice period, the employee may be required by the employer to continue working for the employer. During the notice period, the employee may not without the employer’s permission perform work for any other employer, including noncompetitive work. Without permission from the employer, the employee may only engage in non-work activities.

Employers may reduce the salary and benefits of employees who engage in undefined “gross misconduct” during the garden leave/notice period and such reduction will not be considered a breach by the employer.

To take advantage of the CHOICE Act’s employer-friendly garden leave law, an employer’s garden leave agreement must (1) advise the employee in writing to seek counsel prior to executing the agreement and provide at least seven days to review the agreement before signing; and (2) include a written acknowledgement by the employee of “receipt of confidential information or customer relationships.”

WHO ARE COVERED EMPLOYEES OR CONTRACTORS UNDER THE ACT?

The CHOICE Act applies to employees or contractors who earn or are reasonably expected to earn a salary (which does not include benefits or discretionary compensation) greater than twice the annual mean wage of the county where the employer has its principal place of business, or the county where the employee resides if the principal place of business is not in Florida.

In 2023, the annual mean wage in Florida’s largest counties ranged from $64,436 (Pinellas) to $74,184 (Miami-Dade). This means that for the CHOICE Act to apply, an employer who has its principal place of business in Pinellas County or Miami-Dade County or who has employees residing in those counties (if not their principal place of business) would need to be paying those employees a salary of more than $128,872 in Pinellas County and more than $148,368 in Miami-Dade County to take advantage of the act’s employer-friendly provisions.

The Florida Legislature expressly carved out licensed “healthcare practitioners” from the act.

WHEN DOES THE CHOICE ACT BECOME EFFECTIVE?

If approved by the governor, or allowed to become law without the governor’s signature, the CHOICE Act will go into effect on July 1, 2025. It will not modify Florida’s existing noncompete statute (Florida Statutes § 542.335), which remains in effect and governs restrictive covenants that do not fall within the requirements of the new act.