Florida Will Soon Be Friendliest State in Country For Enforcing Non-Compete Agreements

Florida will soon be a place where businesses can operate with more peace of mind, thanks to a new law that will make it the most enforcement-friendly state in the country for non-compete and garden leave agreements. The “Florida Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act,” passed both the Florida House and Senate on April 24 and expected to be signed by Governor DeSantis, will reshape the state’s laws on restrictive covenants starting on July 1, 2025. The Act does not amend any current statutes, but instead provides more certainty to employers looking to enforce certain non-compete agreements and agreements offering “garden leave” (a period of time where an employee is not required to perform any work but is still paid their salary and benefits in return for not accepting employment elsewhere). Here is what employers should know about the CHOICE Act and three steps you can take to prepare.

Overview of the CHOICE Act

While many federal and state regulatory efforts seek to curb non-compete agreements, the CHOICE Act goes the other direction and creates a presumption that “covered” non-compete agreements and garden leave provisions are enforceable and do not violate public policy. Importantly, the law requires courts to issue an injunction unless the former employee or poaching employer can prove the new employment will not result in unfair competition.

Who is Covered?

The Act defines a “covered employee” as any employee or contractor who works primarily in Florida or works for an employer with their principal place of business in Florida who earns or is reasonably expected to earn a salary greater than twice the annual mean wage of either:

• the county where the company has its principal place of business; or
• the county where the employee resides if the employer’s principal place of business is not in the state.

Notably, “salary” does not include discretionary incentives or awards or anticipated but indeterminable compensation, like bonuses or commissions. The Act excludes from this definition any person classified as a “healthcare practitioner” under Florida law.

What Agreements Are Covered?

The new law covers two types of agreements:

 Type 1- Garden Leave Agreements

A garden leave agreement will be fully enforceable provided that:

1. The employee is advised, in writing, of the right to seek counsel prior to executing the agreement and has at least seven days to review the agreement before execution;
2. The employee and employer agree to provide up to four years advance, express notice before terminating employment (e.g., the “notice period”);
3. The employer agrees to pay the employee their regular base salary and benefits for the duration of the notice period;
4. The employee acknowledges, in writing, that in the course of their employment, the employee will receive confidential information or information about customer relationships;
5. The garden leave provisions provide that:
   • After the first 90 days of the notice period, the covered employee does not have to provide services to the covered employer;
   • The covered employee may engage in nonwork activities at any time, including during normal business hours, during the remainder of the notice period; and
   • The covered employee may, 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.

Type 2- Non-Compete Agreements

Likewise, a non-compete agreement will be fully enforceable provided that:

1. The employee is advised, in writing, of the right to seek counsel prior to executing the agreement and has at least seven days to review the agreement before signing;
2. The employee acknowledges, in writing, that in the course of their employment, the employee will receive confidential information or information about customer relationships;
3. The employee agrees not to assume a role with or for another business in which the employee would provide services similar to the services provided to the covered employer during the three years preceding the non-compete period, or in which it is reasonably likely the employee would use confidential information or customer relationships;
4. The non-compete period does not exceed four years; and
5. The non-compete period is reduced day-for-day by any non-working portion of the notice period pursuant to a covered garden leave agreement, if applicable.

Notably, there are no restrictions on the geographic scope of a covered non-compete agreement. 

What Else?

• Employers may introduce these agreements either at the beginning of employment or during the course of employment, provided that the employee still has seven days to consider signing the agreement before the offer of employment (or continued employment) expires.
• Employers may also elect to shorten a period of garden leave at their discretion by providing the employee with 30 days’ advanced written notice.
• The bill also states that, if the covered employer has a principal place of business in Florida and uses a covered agreement expressly governed by Florida law, then “if any provision of this section is in conflict with any other law, the provisions of this section govern.” What happens if the employee of such a covered employer lives in a state that bans non-compete agreements outright, like California? This situation is very likely to play out in the courts, and it may come down to where the first suit is filed.

Remedies Available

Of course, drafting and executing these agreements means very little if employers have to jump through hoops to enforce them. However, the CHOICE Act makes obtaining an injunction against a breaching employee a lot less burdensome because it requires courts to issue a preliminary injunction against a covered employee.

A judge may only modify or dissolve the injunction if the covered employee – or prospective employer – proves by clear and convincing evidence (which must be based on non-confidential information) that:

• the employee will not perform similar work during the restricted period or use confidential information or customer relationships;
• the employer failed to pay the salary or benefits required under a covered garden leave agreement, or failed to provide consideration for a non-compete agreement, after the employee provided a “reasonable opportunity” to cure the failure; or
• the prospective employer is not engaged in (or preparing to engage in) a similar business as the covered employer within the restricted territory.

If the employee engages in “gross misconduct” against the covered employer, the covered employer may reduce the salary or benefits of the covered employee or “take other appropriate action” during the notice period, which would not be considered a breach of the garden leave agreement.

3 Key Steps For Employers

Assuming this bill is signed into law, Florida will become by far the most enforcement-friendly state in the country for non-competes and garden leave provisions starting July 1, 2025. (Arguably, it already was, but this law would go substantially further than the current Florida restrictive covenants statute.) Employers should prepare for this new day by considering the following three steps:

• Review existing agreements and consider whether your agreements need to be modified to comply with the Act’s definition of a “covered” garden leave or non-compete agreement.
• Understand that restrictive covenants can still be used and enforced against employees who earn less than two times the mean salary for the applicable county. However, employers will not have an entitlement to a preliminary injunction without proving a legitimate business interest and irreparable harm.
• It is always a good practice to review your company’s confidentiality protocols and make sure your policies regarding trade secrets, customer information, and confidential information are comprehensive, up to date, and legally compliant. While the CHOICE Act only requires that the employee acknowledge access to confidential information, the more guardrails in place, the better.

FL Minimum Wage Increase in September 2023

Reminder- Florida’s minimum wage will increase to $12.00 per hour on September 30, 2023. The direct wage for tipped employees will also increase to $8.98 per hour. Be sure to update your minimum wage poster(s) before September 30, 2023. Please let us know if you need copy of the updated poster(s).

FL Minimum Wage Increase in September 2022

Florida Governor Amends Safer-At-Home Order And Announces Plan To Reopen State

Florida Governor Ron DeSantis just extended his Safer At Home Order for the State of Florida but announced his plan to gradually re-open the state pursuant to a new Order that will go into effect just after midnight (at 12:01 am) on the morning of May 4, 2020. The new Order initiates the first of three phases to re-open every county in Florida except for Miami-Dade, Broward and Palm Beach counties. Additionally, local governments in Florida will also be able to have more restrictive policies in place if they desire. What do Florida employers need to know?

Essential And Non-Essential Businesses Are Permitted To Operate Pursuant To CDC And OSHA Guidelines

The new Order permits all services and activities currently allowed under the previous Safer-at-Home Order. Any non-essential businesses that were not previously permitted to be open can reopen as long as they also follow CDC and OSHA guidelines. However, The Order contains the following industry specific restrictions:

• Schools: Schools will remain closed during Phase One and can continue conducting distance learning.
• Healthcare: Hospitals and senior living facilities are prohibited to have visitors, and those interacting with residents and patients must adhere to strict protocols regarding hygiene. However, elective surgeries can resume, as clinically appropriate at facilities that adhere to Centers for Medicare & Medicaid Services (CMS) guidelines. Additionally, any facility that performs elective procedures must be able to immediately convert for treatment of COVID-19 patients in a surge capacity situation, must have adequate PPE, has not sought government assistance regarding PPE supplies since resuming elective procedures, and has not refused to provide support to and proactively engage with skilled nursing facilities, assisted living facilities, and other long term care residential providers.
• Hospitality: Sit-down dining establishments can operate at 25% occupancy under strict physical distancing protocols. However, bars will remain closed.
• Retail: Storefronts may operate at no more than 25% of their building occupancy.
• Museums and libraries: Can operate at no more than 25% of their building occupancy if permitted by local government. Also, any interactive functions or exhibits including child play areas must remain closed.
• Miscellaneous: Gyms, movie theatres, and professional services (such as hair salons and barbershops) will remain closed.

Every business is required to continue to follow guidelines issued by the CDC and OSHA. These guidelines include:

• Promoting healthy hygiene practices;
• Intensifying cleaning, disinfection (e.g., small static groups, no large events);
• Avoiding non-essential travel, and encouraging alternative commuting and telework;
• Spacing out seating (more than 6 feet) and staggering gathering times;
• Restricting use of any shared items and spaces; and
• Training all staff in above safety-actions.

The CDC also recommends that businesses only reopen after they have implemented safeguards for the ongoing monitoring of employees, including:

• Encouraging employees who are sick to stay home;
• Establishing routine, daily employee health checks;
• Monitoring absenteeism and having flexible time off policies;
• Having an action plan if a staff member gets COVID-19;
• Creating and testing emergency communication channels for employees; and
• Establishing communication with state and local health authorities.

Senior Citizens And Individuals With Significant Underlying Medical Conditions

The Order strongly encourages individuals who are older than 65 and those with significant underlying medical conditions to stay at home. They should take all measures to limit the risk of exposure to COVID-19 such as wearing masks during face-to-face interactions. Additionally, the Order encourages individuals to avoid socializing in groups of more than 10.

Social Distancing And Other Guidelines

Additionally, all persons in Florida should practice social distancing, avoid nonessential travel, and adhere to guidelines from the CDC regarding isolation for 14 days following travel on a cruise or from any international destination and any area with significant presence of COVID-19. The Order also extends Governor DeSantis’ Orders regarding airport screening and isolation of individuals traveling to Florida. Notably, there is an exception for these orders for persons involved in military, emergency, health or infrastructure response or involved in commercial activity.

Criminal Penalties

A violation of the Order is a second-degree misdemeanor which is punishable by imprisonment not to exceed 60 days, a fine not to exceed $500.00 or both.

What Does This Mean For Employers?

Employers with operations in Florida should review the CISA guidance and Miami-Dade County Emergency Order 07-20, and its amendments, to determine if they are deemed essential or non-essential.  

Before reopening, you should have a thorough plan in place to establish a safe and healthy workplace and share that plan to provide employees peace of mind. You should also be prepared to address concerns from older employees and those with underlying significant health conditions regarding whether or not they must come in to work. You should also carefully assess the availability of telework for these employees.

As you begin the process of reopening, you should familiarize yourself with some useful info: 

• 5 Steps To Reopen Your Workplace, According To CDC’s Latest Guidance. 

• 4-Step Plan For Handling Confirmed COVID-19 Cases When Your Business Reopens 

Florida’s Minimum Wage Increased as of January 1, 2020

Florida raised its minimum wage to $8.56 an hour beginning Jan. 1, 2020, up 10 cents from $8.46 in 2019. For tipped employees, the minimum wage will be at least $5.54 an hour.

The minimum wage rate is recalculated each year on Sept. 30, based on the Consumer Price Index. 

Employer found liable for intentionally violating minimum wage requirements are subject to a fine of $1000 per violation, payable to the state in addition to potential civil action law suit. 

Be sure to update your required Florida Minimum Wage Posting to reflect this change. You can download a copy of the new poster here.

Florida’s Minimum Wage to Increase on January 1, 2018

Florida is raising its minimum wage to $8.25 an hour beginning Jan. 1, up 15 cents from $8.10 in 2017. For tipped employees, the minimum wage will be at least $5.23 an hour.

The minimum wage rate is recalculated each year on Sept. 30, based on the Consumer Price Index. 

Employer found liable for intentionally violating minimum wage requirements are subject to a fine of $1000 per violation, payable to the state in addition to potential civil action law suit. 

Be sure to update your required Florida Minimum Wage Posting to reflect this change. You can download a copy of the new poster here.

Florida’s Minimum Wage to Increase on Jan 1, 2017

Florida is raising its minimum wage to $8.10 an hour beginning Jan. 1, up 5 cents from $8.05 in 2016, the state Department of Economic Opportunity has announced. For tipped employees, the minimum wage will be at least $5.08 an hour.

The minimum wage rate is recalculated each year on Sept. 30, based on the Consumer Price Index. In 2016, the state’s minimum wage was unchanged from the previous year.

Be sure to update your required Florida Minimum Wage Posting to reflect this change. You can download a copy of the new poster here.

Mandatory Florida Posting Change

The State of Florida has updated its Discrimination poster to include pregnancy as a protected class. The state’s Civil Rights Act was amended earlier this year to prohibit discrimination on the basis of pregnancy. This amended law took effect July 1st and you are required to post this revised notice. Be sure to check your postings to make sure you have the updated notice posted. Please contact out office if you need a copy of the updated notice.

Florida Employment Bills on Radar

Florida’s 2015 legislative session started in March with many employment-related measures being introduced. They include:

SB 98, HB 25: Employment Discrimination Creating the Helen Gordon Davis Fair Pay Protection Act recognizing the importance of the Department of Economic Opportunity and the Florida Commission on Human Relations in ensuring fair pay; creating the Governor’s Recognition Award for Pay Equity in the Workplace; and requiring that the award be given annually to employers in Florida who have engaged in activities that eliminate barriers to equal pay for equal work for women

SB 114, HB 47: State Minimum Wage Increasing the state’s hourly minimum wage to $10.10.

SB 156, HB 33: Prohibited Discrimination Revising the Florida Civil Rights Act to include sexual orientation and gender identity or expression as protected characteristics; and prohibiting discrimination based on perceived race, color, religion, sex, national origin, age, sexual orientation, gender identity or expression, handicap, or marital status.

SB 192, SB 246, HB 1: Texting While Driving Revising penalties for violations of the Florida Ban on Texting While Driving Law to include enhanced penalties when the violation is committed in a school zone and removing requirement that provisions be enforced as secondary action by law enforcement.

SB 214, HB977: Discrimination in Employment Screening (“Ban the Box”) Prohibiting an employer from inquiring into or considering an applicant’s criminal history on an initial employment application, unless required to do so by law.

SB 356, HB 121: Employment of Felons Providing incentives for employment of person previously convicted of felony.

SB 456, HB 325: Labor Pools Revising the methods by which labor pools are to compensate day laborers.

SB 528, HB 683: Medical Use of Marijuana Permitting medical use of marijuana and providing licensure requirements for growers and retailers.

SB 890, HB 455: Florida Overtime Act of 2015 Requiring payment of time-and-one-half an employee’s regular rate of pay for all hours worked over eight in a day, over 40 in a work week, or on the seventh day of any workweek.

SB 892, HB 297: Safe Work Environments Subjecting employees to an “abusive work environment” is made an unlawful employment practice, and retaliation for reporting the practice is prohibited.

SB982, HB 625: Discrimination Based on Pregnancy Amending the Florida Civil Rights Act to prohibit discrimination based on pregnancy, childbirth, or related medical conditions. (The Florida Supreme Court in 2014 held that the Act protects against pregnancy discrimination.)

SB1318, HB 589: State Minimum Wage Making it a third degree felony to procure labor for less than minimum wage, i.e., “with intent to defraud or deceive a person.”

SB1396, HB 433: Employment Discrimination Amending the Florida Civil Rights Act to include unpaid interns within the definition of “employee.”

SB1490, HB 1185: Florida Healthy Working Families Act (“Mini FMLA”) Requiring employers to provide sick and safe leave to employees and creating a complaint procedure, plus a civil cause of action for damages and fees in the event of a violation. Employers of more than nine employees must provide paid sick and safe leave; employers of nine or fewer employees must provide unpaid sick and safe leave.

SB 126: Social Media Privacy Among other things, prohibiting an employer from requesting or requiring access to a social media account of an employee or prospective employee under certain circumstances.

SB 1096: Unemployment Compensation Prohibiting disqualification of victims of domestic violence from receiving benefits if they leave work voluntarily.

Federal Appeals Court Delivers Potentially Crippling Blow to Obamacare

Following the recent Supreme Court ruling regarding contraceptives in the Hobby Lobby Stores case, a new circuit decision now sets the stage for another possible Supreme Court decision on the ACA.  On Tuesday (July 22, 2014), the U.S. Court of Appeals for the District of Columbia (in Halbig v. Burwell) and the U.S. Court of Appeals for the Fourth Circuit (in King v. Burwell) issued conflicting opinions regarding the IRS’ authority to administer subsidies in federally facilitated exchanges.  

In general, the employer mandate requires that “applicable large employers” offer their full-time employees minimum essential coverage or potentially pay a tax penalty in 2015.  However, according to the statutory text of the ACA, the penalties under the employer mandate are triggered only if an employee receives a subsidy to purchase coverage “through an Exchange established by the State under section 1311…” of the ACA.  If a state elected not to establish an exchange or was unable to establish an operational exchange by January 1, 2014, the Secretary of HHS was required to establish a federal-run exchange under section 1321 of the ACA.  

The appellants in each of these cases are residents of states that did not establish state run exchanges.  Consequently, the appellants argue that the IRS does not have the authority to administer subsidies in their states because the exchanges were set up by HHS under section 1321 of the ACA and not under section 1311 as is the clear prerequisite for IRS authority to administer the subsidies.

In regulations implementing the subsidies, the IRS recognized this discrepancy and noted that “[c]ommentators disagreed on whether the language [of the ACA] limits the availability of the premium tax credit only to taxpayers who enroll in qualified health plans [QHPs] on State Exchanges." 

The IRS, however, rejected these comments and stated that, “[t]he statutory language of section 36B and other provisions of the Affordable Care Act support the interpretation that credits are available to taxpayers who obtain coverage through a State Exchange, regional Exchange, subsidiary Exchange, and the Federally-facilitated Exchange. Moreover, the relevant legislative history does not demonstrate that Congress intended to limit the premium tax credit to State Exchanges.  Accordingly, the final regulations maintain the rule in the proposed regulations because it is consistent with the language, purpose, and structure of section 36B and the Affordable Care Act as a whole.”

In Halbig v. Burwell, the D.C. Circuit disagreed with the IRS’ interpretation and, in a 2-1 decision, held that the IRS regulation authorizing tax credits in federal exchanges was invalid.  The court focused heavily on the text itself and concluded, “that the ACA unambiguously restricts the …subsidy to insurance purchased on Exchanges established by the state.”

In an opinion issued only hours following the D.C. Circuit decision, the 4th Circuit, in King v. Burwell, agreed with the IRS’ interpretation and upheld the subsidies by permitting the IRS to decide whether the premium tax credits should be available over the federal exchange.  The justices argued that the text did not intend to create two unequal exchanges. Additionally, they argue that the ambiguous text of the act intended that the exchanges be operated as appendages of the Bureaucracy, and so under the directives of the IRS.

Currently, 36 states are using federally facilitated exchanges, including Florida. Further, roughly 85% of enrollees who signed up for health insurance receive subsidies allowing them to purchase coverage that would be otherwise unaffordable.  If the subsidies allocated over the federal exchange were declared invalid, those individuals’ ability to receive subsidies to purchase coverage could be jeopardized. As a result, the average price of a health plan is projected to rise from $82 per month to $346 per month, making it more difficult to afford for approximately 5.4 M enrollees.

While the Halbig decision is a major setback to the ACA, it is almost certainly not the final word on this issue.  Given the fact that two courts have reached different outcomes, the Supreme Court is more likely to weigh in on the decision. However, the Halbig decision is likely to be reviewed by the entire D.C. Circuit prior to any potential review by the Supreme Court.