FORT LAUDERDALE NON-COMPETE AGREEMENT: CHOICE ACT EFFECTIVE DATE

Florida’s Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth Act, or CHOICE Act for short, went into effect on July 1, 2025. The Choice Act is a significant piece of legislation because it substantially broadens an employer’s ability to restrict employees and independent contractor from competing against the employer. The Act, applies to employees and independent contractors earning a salary greater than twice the annual mean wage of the Florida county where the employer has its principal place of business or the Florida county where the employee resides if employer does not have a principal place of business in Florida. Fla. Stat. § 542.44 (proposed); Fla. Stat. § 542.45 (proposed). The Act allows employers to contractually prohibit employees and independent contractors from competing for up to four years without establishing the existence of a legitimate business interest or the reasonableness of the duration. Courts must preliminarily enjoin an employee or independent contractor accused of violating the restrictive covenant with limited exception. The injunction can only be modified or dissolved if the employee or independent contractor demonstrates he or she will not perform work similar to the services offered by the employer, the employer failed to pay the contractually required amount, or the employer is not engaged in business in the geographic area specified in the noncompete agreement. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Employers may try applying the CHOICE Act’s broad provisions to restrictive covenants entered with employees and independent contractors before July 1, 2025. However, employers will likely face difficulties in doing so because the Act contains certain notice requirements obligating an employer to provide employees and independent contractors certain notice before they enter the restrictive covenant. The employer must provide CHOICE Act restrictive covenants to prospective employees and independent contractors “at least 7 days before an offer of employment expires.” Employers must also provide CHOICE Act restrictive covenants to existing employees and independent contractors “at least 7 days before the date that an offer to enter into [the]… noncompete agreement expires.”

Assuming an employer complied with the CHOICE Act’s notice requirements, it may have a better chance of using the CHOICE Act to enforce restrictive covenants entered before July 1, 2025. However, application of the CHOICE Act to restrictive covenants entered before July 1, 2025 is not a certainty because the statute simply states, “[t]his act shall take effect July 1, 2025.” It is unclear from the statutory langue whether the Act only applies to restrictive covenants entered on and after July 1, 2025, or whether the Act applies to restrictive covenants entered before July 1, 2025 but beached after July 1, 2025. Henao v. Prof’l Shoe Repair, Inc., may provide some limited guidance on this matter. 929 So. 2d 723 (Fla. 5th DCA 2006). In Henao, a question arose as to whether a pre-1996 version of the restrictive covenant statute applied. The pre-1996 version had since been superseded by a new version of the statute that became effective on July 1, 1996. The court determined the pre-1996 version of the restrictive covenant statute did not apply to the lawsuit because the non-compete agreement at issue was entered sometime in 1999. A literal interpretation of this holding is that courts should look to the date the restrictive covenant is entered to determine whether the CHOICE Act applies. However, the holding in Henao may have limited applicability because it did not address restrictive covenants entered before the effective date. Court construing this particular issue may reach a different result or use a different analysis.

The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.