Florida Makes It Easier to Stop Employees Competing After Leaving

Florida has long been considered one of the most employer-friendly states for enforcing noncompete agreements. Living up to its reputation and bucking the nationwide trend of states enacting laws to limit, if not ban, the use of noncompete agreements, lawmakers passed the Florida Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth Act, which went into effect July 1.

Florida employers now have two options to restrict employees and independent contractors from working for a competitor for up to four years:

Covered garden leave agreements prevent an employee from engaging in work for another employer without the covered employer’s permission. The employee continues to receive their base salary and benefits during the garden leave period and can stop providing services to the covered employer after the first 90 days.

Covered noncompete agreements prohibit an employee from assuming a role in which the employee would provide services similar to those provided during the three years preceding the noncompete period, or is reasonably likely to use the covered employer’s confidential information or customer relationships.

The new law includes notice and other requirements that are easy for an employer to satisfy, such as advising employees of their right to seek counsel before signing. The law also sets an income threshold, only applying to employees earning a salary 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 employer’s principal place of business isn’t in Florida.

The CHOICE Act doesn’t replace Florida’s existing restrictive covenant law or otherwise affect agreements that don’t satisfy the law’s requirements.

Mandatory Injunctions

Aside from extending the permissible duration of garden leave agreements and noncompetes to four years, the CHOICE Act stands out among state noncompete laws by requiring that a court issue a preliminary injunction simply upon motion by a covered employer seeking enforcement of a covered agreement.

A covered employer can enjoin a departing or former employee from starting a new job without showing it has a legitimate business interest to protect, that the employee used or disclosed confidential information or violated another restrictive covenant, or that the employer will suffer irreparable harm without the injunction.

When an injunction is issued, the burden under the CHOICE Act shifts to the employee to modify or dissolve it by establishing “by clear and convincing evidence, based on nonconfidential information” that the employee won’t perform similar work during the restricted period or use the employer’s confidential information or customer relationships; the employer failed to pay or provide the consideration provided for in the noncompete after a “reasonable opportunity” to cure the failure; or the new or prospective employer isn’t engaged in or planning to engage in a similar business in the geographic area specified in the noncompete.

The CHOICE Act also mandates that a court preliminarily enjoin a new or prospective employer from engaging a covered employee during the noncompete period, solely upon application by a covered employer seeking enforcement of a covered noncompete.
The court may modify or dissolve the injunction only if the prospective employer establishes, again by clear and convincing evidence based on non-confidential information, that the employee won’t perform similar work during the restricted period or use the covered employer’s confidential information or customer relationships; or the prospective employer isn’t engaged in or planning to engage in a similar business in the geographic area specified in the noncompete.

Anticipated Challenges

A coalition of business organizations and legal scholars urged Florida Gov. Ron DeSantis (R) to veto the CHOICE Act, describing the act as “anti-innovative” and arguing it “would distinguish Florida as having the most starkly anti-worker noncompetes regime in the nation.” Notably, the governor didn’t sign the bill into law, instead letting it become law by not taking action.

Critics of the CHOICE Act are considering several legal challenges to the law.

Unequal burdens. We can expect to see procedural challenges to the act, particularly to the heightened “clear and convincing” burden that applies to employees seeking to modify or dissolve an injunction as compared to the beneficial presumptions available to employers seeking to enforce covered agreements. These unequal burdens make it easier for an employer to obtain an injunction and much more difficult for an employee or new employer to modify or dissolve an injunction once it’s entered.

Jurisdictional battles. Because the act applies not only to employees who work in Florida but also to those working for Florida-based companies outside the state, there are likely to be challenges to enforcement based on conflicts with the noncompete laws and public policy of other states where ostensibly covered employees live and work.

Impact on businesses. The ease with which employers can obtain injunctions against employees will significantly impact employee mobility and hiring practices, leading business groups to assert that the act is anti-competitive and conflicts with Florida’s public policy against unreasonable restraints on trade or commerce.

What Now

With Florida’s dramatically changed landscape for the enforcement of noncompetes, employers should consider modifying their agreements to take advantage of the CHOICE Act’s favorable presumptions. As future litigation is likely to test the more extreme aspects of the act, employers should be ready to adjust their agreements again if challenges are successful.

Employers looking to hire Florida employees (or employees of Florida-based businesses) should take care to identify whether prospective employees have signed CHOICE Act covered agreements and, if so, assess the enforceability of those agreements. Employers may need to be creative in finding talent, such as recruiting from out of state where employees are less likely to have signed covered agreements.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Jennifer Bullock is a partner at Morgan Lewis who represents national employers in employment litigation.

Siobhan E. Mee is a partner at Morgan Lewis who represents companies and individuals in complex employment litigation matters.

Sophia Pereira is an associate at Morgan Lewis who is part of a team that advises clients on a broad range of labor and employment matters.

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