New Florida Statute Favors Enforcement Of Noncompetition Agreements By Employers

For the past 29 years, enforcement of noncompetition agreements in Florida has been governed primarily by Florida Statute § 542.335, which requires the party seeking enforcement of a noncompetition agreement to prove the existence of one or more legitimate business interests that the restriction is designed to protect and that the restriction is reasonably necessary for the protection of the legitimate business interest. These requirements changed with respect to certain noncompetition agreements starting July 1, 2025, with the enactment of the Florida Contracts Honoring Opportunity, Investment Confidentiality and Economic Growth (CHOICE) Act ("the CHOICE Act"). The CHOICE Act strongly favors employers seeking to enforce noncompetition agreements that satisfy the criteria specified in this Act. With respect to noncompetition agreements with employees and independent contractors, the criteria for enforcement of a noncompetition agreement under the CHOICE Act include the following:

• The noncompetition agreement must have been entered into on or after July 1, 2025, which is the effective date of the CHOICE Act. All noncompetition agreements and other restrictive covenants entered into prior to July 1, 2025, remain subject to Fla. Stat. § 542.335.
• The employee or independent contractor subject to the noncompetition restriction must either (i) earn or be reasonably likely to earn a salary of at least double the average wage of all employees for all occupations in either (a) the Florida county in which the employer maintains its principal place of business, or (b) if the employer's principal place of business is outside of Florida, the Florida county of residence of the employee or independent contractor or (ii) have access to the employer's confidential information or customer relationships. The CHOICE Act defines employees and independent contractors meeting these criteria as "covered employees." The CHOICE Act expressly excludes medical professionals (as that term is defined in Fla. Stat §456.001) from the definition of "covered employee". As a result, the provisions of the CHOICE Act cannot be utilized to enforce noncompetition agreements executed by physicians, dentists, pharmacists, nurses, psychologists and other specific healthcare professionals. The CHOICE Act defines the term "covered employer" to mean an employer that has employed or engaged a covered employee.
• With respect to new hires, a covered employee must be given at least seven (7) days' notice of the noncompetition agreement before the offer of employment expires. With respect to current employees who are presented with a new CHOICE noncompetition agreement, the covered employee must be provided with at least seven (7) days' notice before the offer to enter into the noncompetition agreement expires.
• The covered employee must be advised in writing of the right to seek counsel to review and advise with respect to the noncompetition agreement.
• The covered employee must acknowledge in writing that he or she will receive confidential information or customer relationships as part of the employment/engagement, which can be done in the noncompetition agreement itself or an employee handbook provided the covered employee signs for the employee handbook.
• The noncompetition agreement signed by the covered employee must meet the definition of a "covered noncompete agreement." Under the CHOICE Act, a covered noncompete agreement is defined as a written agreement, or a portion of a written agreement, between a covered employee and a covered employer in which, for a period not to exceed four (4) years and within a specified geographic area, which may be global in scope, the covered employee agrees not to assume a role with or for another business, entity, or individual in which either (i) the covered employee would provide services similar to the services provided to the covered employer during the three (3) year period preceding the noncompete period or (ii) in which it is reasonably likely the covered employee would use the confidential information or customer relationships of the covered employer. Narrower restrictions, such as non-solicitation and confidentiality provisions, are not governed by the CHOICE Act and remain subject to the requirements of Fla. Stat. § 542.335.

The CHOICE Act favors employers because it provides that, upon application by a covered employer seeking to enforce a noncompetition restriction that satisfies the statutory requirements, the court must preliminarily enjoin the covered employee from providing services to any business entity or individual other than the covered employer. The CHOICE Act does not require the court to consider the reasonableness of the restriction as a factor in whether to award full relief and contains no statutory presumptions of unreasonableness in geographic scope or duration. The CHOICE Act mandates the award of preliminary injunctive relief even if no solicitation of the covered employer's clients has taken place, no confidential information has been used, and no confidential information is in the possession of the covered employee. Further, upon application by a covered employer, a court is required to enter a preliminary injunction against the new employer prohibiting the new employer from hiring or continuing the employment of the covered employee during the noncompete period.

After a preliminary injunction has been entered, the CHOICE Act places the burden on the covered employee and the new employer to modify or dissolve the injunction. The CHOICE Act provides limited grounds for such modification or dissolution. If a covered employee wishes to have the preliminary injunction modified or dissolved, the covered employee must prove by clear and convincing evidence (a high standard) either that (i) the covered employee will not perform, during the noncompete period, any work similar to the services provided to the covered employer during the 3-year period preceding the commencement of the noncompete period, or use confidential information or customer relationships of the covered employer; or (ii) the covered employer has failed to pay or provide the consideration provided for in the covered noncompete agreement and has had a reasonable opportunity to cure the failure. If a new employer wishes to have the preliminary injunction against it modified or dissolved, the new employer must prove by clear and convincing evidence either (i) the covered employee will not provide any services similar to the services provided to the covered employer during the last three (3) years preceding the noncompetition period or (ii) the business or individual seeking to employ or engage the covered employee is not engaged in and is not planning to or preparing to engage in, any business activity similar to those engaged in by the covered employer during the noncompete period. The CHOICE Act provides no other basis for a covered employee or new employer to modify or dissolve a preliminary injunction entered pursuant to the CHOICE Act. Unlike Fla. Stat. § 542.335, the court does not appear to need to consider the geographic or temporal reasonableness of the restriction, so long as the duration of the noncompetition provision is no more than four (4) years.

Notwithstanding the CHOICE Act's favorable treatment of the enforcement of covered noncompete agreements by preliminary injunction, the Act does not alter an enforcing party's right to seek damages. Damages are recoverable under the CHOICE Act and the prevailing party must be awarded its attorney's fees. In fact, unlike Fla. Stat. § 542.355, which makes an attorney's fee award discretionary, the CHOICE Act appears to mandate the award of attorney's fees to a prevailing party.

Garden Leave Agreements Also Are Protected Under the Florida CHOICE Act

Noncompetition agreements are not the only agreements regulated under the CHOICE Act. Garden leave agreements, i.e., agreements in which a termination of employment occurs only after the expiration of a notice period and the employee is required to cease participating in the employer's business but is still being paid during the notice period, also are addressed in the CHOICE Act. Much like with "covered noncompetition agreements", the CHOICE Act creates the new term "covered garden leave agreement." The Act defines a "covered garden leave agreement" to be a written agreement between a covered employer and covered employee in which:

• The covered employer and employee have agreed to a notice period of no more than four (4) years of advance express notice before terminating the employment or contractor relationship;
• The covered employee agrees not to resign before the end of the notice period; and
• The covered employer agrees to retain the covered employee for the duration of such notice period and to continue paying the covered employee the same salary and providing the same benefits that the covered employee received during the last month preceding the beginning of the notice period.

The CHOICE Act governs covered garden leave agreements expressly governed by Florida law between (i) a covered employee who maintains a primary place of work in Florida and (ii) a covered employer whose principal place of business is in Florida. The CHOICE Act makes clear that covered garden agreements do not violate state antitrust laws and are fully enforceable under Florida law if they satisfy the following requirements:

• The covered employee was advised in writing of the right to seek counsel before execution of the covered garden leave agreement;
• The current or prospective employee was provided with the covered garden leave agreement at least seven (7) days before the offer of employment or the opportunity to enter into the agreement expired;
• The covered employee acknowledged in writing the receipt of confidential information or customer relationships:
• The covered garden leave agreement provided that, after the first ninety (90) days of the notice period, the covered employee did not have to provide services to the covered employer;
• The covered garden leave agreement provided that the covered employee could engage in non-work activities at any time, during the remainder of the notice period; and
• The covered employee could, with the permission of the covered employer, work for another employer while still employed by the covered employer, during the remainder of the notice period.

The CHOICE Act makes clear that, upon application by a covered employer seeking to enforce a covered garden leave agreement, a court must preliminarily enjoin a covered employee from providing services to any business, entity or individual other than the covered employer during the notice period. Once a preliminary injunction is entered, the court can modify or dissolve the preliminary injunction enforcing a covered garden leave agreement only if the covered employee establishes by clear and convincing evidence and based on non-confidential information that (i) the covered employee will not perform during the notice period any work similar to the services provided to the covered employer during the three (3) year period preceding the commencement of the notice period or use confidential information or customer relationships of the covered employer or (2) the covered employer failed to pay or provide the salary and benefits provided for the garden leave agreement during the notice period and had a reasonable opportunity to cure the failure. Similarly, the CHOICE Act also requires a court, upon application of a covered employer enforcing a covered garden leave agreement, to preliminarily enjoin any business, entity or individual from employing or otherwise engaging a covered employee during the notice period.

As with covered noncompete agreements, the CHOICE Act preserves a covered employer's ability to pursue damages and attorneys' fees (as a prevailing party) in the event of a violation of the underlying covered garden leave agreement by a covered employee. In addition, the CHOICE Act allows a covered employer to reduce the salary and benefits of the covered employee during the notice period, without losing the statutory benefits under the Act, if the covered employee engages in any gross misconduct.

In light of the CHOICE Act's employer-friendly provisions, most employers should consider modeling their noncompetition and garden leave agreements to meet the criteria in the Act. The ability to obtain preliminary injunctive relief without having to satisfy the legitimate business interest test provides substantial leverage to employers to prevent their employees from going to work for an employer's competitors immediately after the employment with the covered employer ends. For the same reasons, employers seeking to hire candidates subject to a noncompetition or garden leave agreement need to carefully analyze the Florida CHOICE Act and its possible application to a candidate's agreement with a former employer.

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