While several states have imposed bans on noncompete agreements, the Florida Legislature went the opposite way during its recent session and made it easier for employers to impose these agreements on workers.
That’s prompted a coalition of organizations and law professors to ask Gov. Ron DeSantis to veto the measure (HB 1219) — known as the CHOICE Act — when it reaches his desk.
The name stands for Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth. The bill would allow an employer to restrict an employee from taking competitive employment for up to four years, through either a “garden-leave” provision or a noncompete agreement.
Any company with employees who are “reasonably expected” to earn more than twice the annual mean wage of the county in which the business is located can subject workers to noncompete agreements. It would also apply to independent contractors and out-of-state employees.
The proposal is strongly opposed by the Economic Innovation Group, which along with more than a dozen law professors sent a letter to the governor last week, calling upon him to veto it.
“The CHOICE Act would codify one of the most anti-innovative, anti-startup, and anti-worker policies to be found anywhere in the country,” said John Lettieri, president and CEO of the organization, in a written statement.
“While dozens of other states are enacting limitations on the use of noncompete agreements, this legislation would take Florida in the opposite direction – locking in talent, stifling wage growth, and undermining efforts to build a cutting-edge ecosystem in the Sunshine State.”
Under the bill, if a company uses a properly drafted noncompete or garden-leave agreement, Florida courts would have to issue preliminary injunctions to stop a former employee from working for a competitor unless the employee can convince the court otherwise.
Employers and employees would need to provide advance notice of up to, but no more than, four years before terminating the employment or contractor relationship.
During a committee stop in the Senate, Jacksonville Democratic Sen. Tracie Davis noted that most noncompete agreements last between one and two years. She asked Northeast Florida GOP Sen. Tom Leek (the bill sponsor) why the state should bind workers for four years.
Leek referenced moves made by the Federal Trade Commission last year to adopt a comprehensive ban on new noncompetes with all workers, including senior executives. A federal judge in Texas overturned the ban in August.
“Florida is poised to become one of the finance capitals of the world,” Leek said at the time. “And if we want to attract those kinds of clean, high-paying jobs, you have to provide those businesses protection on the investment that they’re making and their employees.”
A noncompete lasting for four years would be the longest of any state in the country, according to the Economic Innovation Group.
“There is an abundance of economic research demonstrating that the strict enforcement of noncompete agreements sharply reduces employee wages, the quality and quantity of new patents, and jobs created by new businesses,” the coalition writes in the letter to DeSantis.
“The CHOICE Act would accelerate these economically harmful trends by enacting the following changes to state noncompete law for exactly the type of workers Florida aims to attract to grow its middle class.”
While that alliance is urging the governor to veto the bill, some well-heeled supporters of DeSantis support it. Among those are Citadel, the Miami hedge fund and financial services company, according to Bloomberg.
Citadel is led by Ken Griffin, a well-known GOP megadonor and financial backer to DeSantis who gave $12 million last year to Keep Florida Clean, the political committee formed to oppose the failed constitutional amendment aimed to legalize recreational cannabis for adults 21 and over.
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