Will DeSantis Sign Bill Allowing Longer Noncompete Agreements in Florida?

While federal agencies and some states have moved to rein in the reach of noncompete agreements, a Florida bill awaiting the governor’s signature would go in the opposite direction, significantly lengthening the agreements and expanding employers’ ability to enforce them.

Gov. Ron DeSantis has yet to sign House Bill 1219, known as the Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act, which was approved by large margins in the Legislature in April.

If DeSantis does sign the bill, the law would take effect July 1. Among other changes, the bill would:

• Double the length of time for noncompetes and so-called “garden leave” agreements, from two years to four years. Garden leave agreements allow employers to keep key officers on the payroll to discourage them from jumping ship to another firm.
• Create a presumption that the agreements are enforceable and should not be considered restraints of trade or a violation of public policy. Under current Florida law, noncompete agreements for longer than two years are presumed to be unreasonable and unenforceable, the Jackson Lewis law firm recently explained.
• Require courts to issue preliminary injunctions to stop an employee from violating agreements. It also would bar courts from dissolving those injunctions unless the worker can show that the new employment will not result in unfair competition, attorneys with the Greenberg Traurig firm noted in the National Law Review.

The bill, if it becomes law, would apply only to covered employees or independent contractors who earn more than twice the annual mean wage in the county where the business is headquartered or where the person lives if the company is based outside of Florida. That could mean the pay threshold ranges from $80,000 to $160,000, Jackson Lewis said.

“Employers seeking to avail themselves of the new Act should take immediate steps to review and modify existing agreements or, if appropriate, draft new agreements,” the firm noted.

Poaching of employees and clients has become an issue in the insurance industry in recent years, with multiple lawsuits filed each year against former officers. Others, including Citadel Securities’ Ken Griffin, lobbyied for the bill. But the CHOICE Act has met significant opposition in Florida since its passage, with a law professor and an employee group urging DeSantis to veto the bill.

“Unlike other states, Florida’s bill would force workers to seek permission from their former employers before taking virtually any new job. If the employer objects, courts would be required to issue an injunction to legally bar the employee from working. This system would create a chilling effect preventing workers from applying for other jobs,” Sam Peak, of the Economic Innovation Group, wrote in the South Florida Sun Sentinel this week.

University of Florida Professor Rachel Arnow-Richman wrote in the Tampa Bay Times that the law would hurt entrepreneurs’ ability to start new businesses in the state. Businesses needing skilled officers also will suffer, she noted.

The text of the bill can be seen here. A legislative analysis is here.

Related: Citadel Lobbies for Four-Year Non-Competes in Home State of Florida

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