Effective immediately, Florida has passed the CHOICE Act, which allows employers to enforce robust restrictive covenants against certain highly compensated employees.
The Act concerns “garden leave agreements” and “noncompete agreements.”
“Garden leave agreement” means a written agreement, or part of a written agreement, between a covered employee and an employer in which:
- The covered employee and employer agree to up to, but no more than, 4 years of advance, express notice before terminating the employment or contractor relationship;
- The covered employee agrees not to resign before the end of such notice period; and
- The 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 from the employer in the last month before the commencement of the notice period. The employer is not obligated to provide discretionary incentive compensation or benefits or have the covered employee continue performing any work during the notice period.
“Noncompete agreement” means a written agreement, or a portion of a written agreement, between a covered employee and an employer in which, for a period not to exceed 4 years and within the geographic area defined in the agreement, the covered employee agrees not to assume a role with or for another business, entity, or individual:
- In which the covered employee would provide services similar to the services provided to the employer during the 3 years preceding the noncompete period; or
- In which it is reasonably likely the covered employee would use the confidential information or customer relationships of the employer.
“Covered employee” in these contexts means an employee or individual contractor who earns or is reasonably expected to earn a salary greater than twice the annual mean wage of the Florida county in which the employer has its principal place of business, or the county in which the employee resides if the covered employer’s principal place of business is not in the state. The term does not include a person classified as a health care practitioner.
Under the Act, a garden leave agreement is fully enforceable provided that:
- A covered employee was advised, in writing, of the right to seek counsel before execution of the garden leave agreement and was provided notice as described below;
- A covered employee acknowledges, in writing, receipt of confidential information or customer relationships; and
- The garden leave agreement provides that:
- After the first 90 days of the notice period, the covered employee does not have to provide services to the employer;
- The covered employee may engage in nonwork activities at any time, including during normal business hours, during the remainder of the notice period;
- The covered employee may, with the permission of the employer, work for another employer while still employed by the employer during the remainder of the notice period; and
- The garden leave agreement notice period may be reduced during the notice period if the employer provides at least 30 days’ advance notice in writing to the covered employee.
A noncompete agreement is fully enforceable provided that:
- A covered employee was advised, in writing, of the right to seek counsel before execution of the covered noncompete agreement and was provided notice as described below;
- A covered employee acknowledges, in writing, that in the course of his or her employment, the covered employee will receive confidential information or customer relationships; and
- A noncompete agreement provides that the noncompete period is reduced day-for-day by any nonworking portion of the notice period, pursuant to a covered garden leave agreement between the covered employee and the employer, if applicable.
Regarding notice of a proposed garden leave agreement, an employer must provide the agreement to:
- A prospective covered employee at least 7 days before an offer of employment expires; or
- A current covered employee at least 7 days before the date that an offer to enter into a covered garden leave agreement expires.
- A covered employer may, as provided for in the covered garden leave agreement, shorten the term of the notice period at any time during the notice period by providing at least 30 days’ advance notice in writing to the covered employee.
Regarding notice of a proposed noncompete agreement, an employer must provide the agreement to:
- A prospective covered employee at least 7 days before an offer of employment expires; or
- A current covered employee at least 7 days before the date that an offer to enter into a covered noncompete agreement expires.
You can find the enacted bill here.
