Florida’s CHOICE Act Changes the Landscape for Restrictive Covenants
Florida’s CHOICE Act Changes the Landscape for Restrictive Covenants
On July 3, 2025, the Florida “Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth” Act (“CHOICE Act”) went into effect. The CHOICE Act creates new categories of restrictive covenants and paves an easier path for employers to enjoin more highly paid employees or contractors who breach their restrictive covenants.
Who and What Does the CHOICE Act Cover?
The CHOICE Act applies only to “covered employees,” which is defined as any employee or individual contractor who earns or is reasonably expected to earn a salary greater than twice the annual mean wage of the county in which the covered employer has its principal place of business (excluding any person classified as a “health care practitioner” under Florida Statutes, Section 456.001). The CHOICE Act defines “annual mean wage” as the most recent annual mean wage as calculated by the United States Department of Labor Bureau of Labor Statistics, or its successor calculation, for all occupations in this state.
For example, the Bureau of Labor Statistics reports that the annual mean wage for Tallahassee, Florida (the only municipality in Leon County, Florida) is $58,230 and $62,990 for Jacksonville, Florida (the only municipality in Duval County, Florida). If a “covered employer,” which is any entity or individual who engages a covered employee, does not have its principal place of business in the state of Florida, then the covered employee’s salary comparison will be done based on the county where the employee resides.
Florida’s CHOICE Act makes clear that covered garden leave agreements and covered noncompete agreements, both forms of restrictive covenants, are enforceable in Florida. The CHOICE Act applies to covered agreements in which a covered employee maintains a primary place of work in Florida, regardless of any applicable choice of law provisions. It also applies to covered agreements with a covered employer whose principal place of business is in Florida and which agreement is expressly governed by the laws of Florida.
A covered garden leave agreement permits covered employers to require a covered employee to provide up to 4 years of advance, express notice (“notice period”) before terminating their employment relationship with a covered employer. The covered employee must agree not to resign during the notice period and the covered employer must retain the employee during the notice period, as well as pay the employee’s salary and benefits to match what the employee was paid in the last month before commencement of the notice period. However, if the covered employee engages in gross misconduct against the covered employer, the covered employer may reduce the salary or benefits of the employee, or take other appropriate action, without this being considered a breach of the garden leave agreement. The covered employee is not required to provide services for the covered employer after the first 90 days of the notice period, creating a de facto noncompete period in which the employee is not necessarily working for the original employer, but would be precluded from working for a competitor.
A covered noncompete agreement prohibits a covered employee from competing with a covered employer for a period of up to 4 years (“noncompete period”), and within a geographic area defined by the noncompete agreement. During the noncompete period, the covered employee is prohibited from accepting employment in which the employee would provide services similar to those services provided to the covered employer during the 3 years preceding the noncompete period. The covered employee is also prohibited from accepting employment if it would be reasonably likely the employee would use the confidential information or customer relationships of the covered employer. For both covered garden leave agreements and covered noncompetes, the covered employer must provide the covered employee with the agreement either 7 days before an offer of employment expires, or, if the employee is currently working for the covered employer, 7 days before the date that an offer to enter into an agreement expires. The covered employer must also advise the employee, in writing, of the right to seek counsel before execution of the covered agreement. The covered employee must acknowledge in writing that, over the course of their employment, the covered employee will receive confidential information or customer relationships.
Burden of Proof Shifts from Employer to Employee
Perhaps the most noticeable difference between the CHOICE Act and Florida’s pre-existing restrictive covenant statute, Section 542.335, is the burden of proof on an employer seeking to enforce a restrictive covenant. Section 542.335, which still applies to those restrictive covenants not covered by the CHOICE Act, requires an employer seeking to enforce a restrictive covenant to prove several elements. Namely, an employer must plead and prove that the restrictive covenant is supported by a “legitimate business interest” and that the restrictive covenant is reasonably necessary to protect the legitimate business interest(s). If an employee breaches a valid restrictive covenant under Section 542.335, irreparable harm is presumed. The employee may rebut the presumption of irreparable harm by a preponderance of the evidence. A finding of irreparable harm is necessary for entry of a temporary or permanent injunction.
However, under the CHOICE Act, if an employer seeks enforcement of a covered agreement, a court must presume that an employee or contractor had access to the covered employer’s confidential information or customer relationships if the employee acknowledged, in writing, that he or she will receive such access.[1] Moreover, a court must preliminarily enjoin the covered employee from providing services to any business, entity, or individual other than the covered employer during either the notice period or noncompete period. The CHOICE Act does not explicitly impose any burden of proof on the employer.
The burden then falls on the employee to prove that the injunction is not necessary. The court may modify or dissolve the injunction against the employee if the employee establishes by clear and convincing evidence, based on nonconfidential information, that: (1) during the notice/noncompete period, the employee will not perform any work similar to the services provided to the covered employer during the 3-year period preceding the commencement of the notice/noncompete period, or use confidential information or customer relationships of the covered employer; (2) the covered employer failed to pay or provide the consideration (salary, benefits, etc.) provided for in the covered agreement and has had a reasonable opportunity to cure the failure; or (3) the business seeking to employ the covered employee is not engaged in, and is not planning or preparing to be engaged in during the noncompete period, business activity similar to that engaged in by the covered employer in the geographic area defined in the covered agreement. Furthermore, similar to Section 542.335, an employer is not limited to injunctive relief, and may pursue monetary damages for all available claims. Thus, not only does the CHOICE Act place the burden of proof on the employee, but it requires the employee to meet the clear and convincing evidence standard. Whereas, under Section 542.335, the employer has the burden of proving key elements of the case, and the employee may rebut that proof merely by a preponderance of the evidence, a lower standard of proof than under the CHOICE Act.
Built-in Protections for Confidential Information
Another benefit to covered employers under the CHOICE Act versus Section 542.335 is the built-in protections for confidential information during an enforcement action. Pursuant to the CHOICE Act, the employee may not rely on confidential information to modify or dissolve the injunction. Any information filed with the court which a covered employer deems confidential must be filed under seal to protect confidentiality.
CHOICE Act Aims to Promote Business Investment in Florida
Overall, as expressed by the legislative findings in Section 542.42 of the CHOICE Act, the CHOICE Act reflects the legislature’s strong desire to encourage predictability in the enforcement of contracts and thereby promote business investment in the state of Florida. As a result, the CHOICE Act strengthens an employer’s position when seeking to enforce a covered agreement against a breaching employee.
[1] Although not explicitly stated in the CHOICE Act, the best practice would be to have the acknowledgement included in the covered agreement itself.
