NON-COMPETE AGREEMENTS: WHAT FURTHER PROTECTION DID THE RECENT FLORIDA LAW GIVE TO BUSINESSES?

In Florida, non-compete agreements are a common feature in employment contracts. They protect a business’s confidential information by restricting employees from working for competitors after they leave. These agreements are regulated by state law, most notably Florida Statute §542.335. However, a significant change arrived with the recently enacted CHOICE Act (Contracts Honoring Opportunity, Investment, Confidentiality & Economic Growth), which took effect on July 1, 2025. This Act has significantly strengthened the enforceability of non-competes for certain employees in Florida.

This article will break down the key aspects of the CHOICE Act and the existing Florida statute. By understanding these regulations, you can ensure your non-compete agreements are both protective and legally sound.

A New Era for Non-Competes: The CHOICE Act

The CHOICE Act specifically applies to “covered employees,” defined as an employee or independent contractor who earns more than twice the annual mean wage of the county where they work. The Act also explicitly excludes healthcare professionals. For any non-compete agreement not falling under the CHOICE Act, the existing regulations of Florida Statute § 542.335 still apply.

Key Changes Under the CHOICE Act

For entrepreneurs with “covered employees,” the CHOICE Act introduces several significant changes that tilt the scales in favor of the employer:

• Longer Durations: The maximum allowable duration for a non-compete agreement has been doubled from two years to four. This gives businesses a longer period of protection.
• Shift in Burden of Proof: Previously, the employer had to prove a non-compete was reasonable and necessary. Now, agreements covered by the Act are presumed to be enforceable. The burden of proof shifts to the employee, who must demonstrate why the agreement is invalid.
• Proof of Breach: Entrepreneurs no longer need to prove that a former employee is actively using confidential information or customer relationships at a new job. It is now sufficient to establish that the employee is likely to use that sensitive information in their new role with a competing business.
• Employee Safeguards: To balance these changes, the Act requires that employees be given at least seven days to review the agreement before signing. They must also be formally advised of their right to seek legal counsel.
• Written Acknowledgment: The agreement must be in writing, and the employee must formally acknowledge that they have received confidential information or access to customer relationships.

When the CHOICE Act Doesn’t Apply

For employees who do not meet the high-income threshold of a “covered employee,” non-compete agreements are still governed by Florida Statute § 542.335. Under this statute, an agreement must be reasonable and necessary to protect a legitimate business interest to be considered valid. Courts use this framework to distinguish between fair protection and anti-competitive overreach.

1. Legitimate Business Interest: First, an employer must demonstrate that the non-compete is protecting a genuine business asset. Courts look for concrete evidence of interests such as:
   • Trade Secrets & Confidential Information: This includes proprietary formulas, strategic plans, and sensitive client lists.
   • Substantial Customer Relationships: If an employee is the primary contact for key clients, an employer can argue a non-compete is needed to protect the goodwill built on the company’s behalf.
   • Specialized Training: If an employer has invested significant resources in providing unique, specialized training, they may enforce a non-compete to prevent the employee from taking those skills directly to a competitor.
2. The Reasonableness Test: Even if a legitimate business interest exists, the restrictions of the non-compete must be reasonable. Florida courts examine three key factors:
   • Duration: For a former employee, a restriction lasting between six months and two years is generally considered reasonable.
   • Geographic Scope: The restricted area must be limited to where the employer conducts business. A statewide ban is unlikely to hold up if the company only operates in a few counties.
   • Scope of Activity: The agreement must be narrowly tailored. It should prevent an employee from performing a similar role for a direct competitor, not from working in the entire industry at any capacity.

Common mistakes that render non-competes unenforceable occur when they contain overly broad geographic restrictions, excessive duration, or lack of legitimate interest.

Protecting Your Business in a Changing Landscape

Non-compete agreements remain a vital tool for Florida entrepreneurs, but their effectiveness hinges on proper implementation. The introduction of the CHOICE Act provides powerful new protections when dealing with high-income employees. For your business, this means you must be strategic. Review your existing non-compete agreements to see if they need to be updated for compliance with the CHOICE Act, especially for your highly-compensated team members. For employees not covered by the Act, continue to focus on crafting targeted, reasonable restrictions that are directly tied to protecting your legitimate business interests. I you need assistance in reviewing your existing restrictive covenant agreements or drafting new agreements for compliance with the CHOICE Act, please contact Luzzi Law Firm (melissaluzzi(at)luzzi-law(dotted)com).

This information is intended to inform firm clients and friends about important matters for businesses. Nothing in this article should be construed as legal advice or a legal opinion, and readers should not act upon the information contained in herein without seeking the advice of legal counsel.