Recently, we have seen significant legislative developments regarding employee non-compete covenants in the states of New York and Florida. These developments are noteworthy, in part because New York and Florida, both historically employer-friendly states, have taken strikingly different approaches to the scope of enforceable non-compete covenants.
What you need to know
- New York's Senate Bill S4641 seeks to ban virtually all non-competes in the employment context. If passed, the bill would generally prohibit employers from entering into non-competes with service providers unless (i) the service provider is a "highly compensated individual" or (ii) the non-compete is entered into in connection with the sale of a business.
- Florida's CHOICE Act enhances employers' rights regarding non-compete and garden leave agreements. Signed into law earlier this month, the CHOICE Act will allow employers to (i) bind "covered employees" to up to four years of "covered non-compete agreements" or (ii) require covered employees to provide up to four years' notice before terminating their employment relationship.
New York
In January 2025, the New York State legislature introduced Senate Bill S4641, seeking to ban virtually all non-competes in the employment context except for non-competes entered into with certain highly compensated individuals. A similar bill was previously passed by both chambers of the New York State Legislature in 2023 but was eventually vetoed by Governor Hochul, who specifically wanted exemptions from the non-compete ban for non-competes for highly compensated individuals and non-competes entered into pursuant to the sale of a business. The current bill addresses both concerns by generally allowing an employer to enter into a non-compete with a "highly compensated individual" (defined as having an average cash compensation of at least $500,000 over the previous three years) and allowing non-competes in connection with a sale of a business.
If passed, the non-compete ban would not be limited to employees, but would apply to all "covered individuals", defined as "any person, other than any highly compensated individual who, whether or not employed under a contract of employment, performs or has performed work or services for another person on such terms and conditions that they are, in relation to that other person, in a position of economic dependence on, and under an obligation to perform duties for, that other person". The bill also clarifies that other types of restrictive covenants will continue to be permitted in the employment context, such as non-competes that are limited to the duration of employment, nondisclosure of trade secrets, confidentiality agreements, and customer and client non-solicitation covenants. Notably, the bill is silent on the covenants prohibiting the solicitation of employees.
The current bill would create a private cause of action allowing any individual to bring a civil action against an employer for violating the new law, and relief may include an injunction against enforcing the non-compete, liquidated damages (not to exceed $10,000), amounts for lost compensation, compensatory damages and/or reasonable attorneys' fees and costs.
As of the date of this publication, the bill has yet to pass the New York State Assembly and land at Governor Hochul's desk. If the bill were to pass, any new or modified non-compete that is entered into after the bill's effective date (to be 30 days after the bill is signed by the Governor) would be nullified and unenforceable. However, the ban would not apply retroactively to existing non-competes.
Florida
Earlier this month, Florida Governor DeSantis signed the Contracts Honoring Opportunity, Investment, Confidentiality and Economic Growth (CHOICE) Act into law. The new law, effective retroactively as of July 1, 2025, greatly enhances employers' rights with respect to both non-compete and garden leave agreements. Specifically, the new law allows employers to bind "covered employees" to up to four years of "covered noncompete agreements" within a defined geographic scope. These definitions are broadly defined: a "covered employee" is an employee or individual contractor whose salary is twice the average annual mean wage of the Florida county in which the employer has its principal place of business or, if the employer's principal place of business is not in Florida, the Florida county in which the covered employee resides; and a "covered noncompete agreement" is an agreement between a covered employee and the employer in which "the covered employee agrees not to assume a role with or for another business, entity, or individual (a) in which the covered employee would provide services similar to the services provided to the covered employer during the three years preceding the noncompete period, or (b) in which it is reasonably likely the covered employee would use the confidential information or customer relationship of the employer". It is worth noting that, unlike the compensation requirement under the garden leave agreements described below, there is no express requirement for payment during the non-compete period.
Similarly, under the CHOICE Act, employers may require covered employees to provide up to four years of notice before terminating their employment relationship. The CHOICE Act lists several requirements for this type of garden leave agreement to be binding, including that: (i) the agreement and the employee's acknowledgement must be in writing; (ii) the covered employee cannot be required to provide services to the employer after the first 90 days of the notice period; (iii) after the first 90 days, the covered employee may work for other employers with the permission of the employer, and may engage in nonwork activities at any time during the garden leave period; and (iv) the employer must continue providing the same salary and benefits to the covered employee during the notice period, but is not required to provide discretionary incentive compensation or supplemental benefits.
The CHOICE Act requires courts to enforce these non-competition and garden leave requirements, except for very narrow reasons. Further, the CHOICE Law clarifies that an injunctive relief is not an exclusive remedy and that an employer may reduce the salary or benefits of the covered employee or take other appropriate action during the non-compete period or the garden leave period if the covered employee engages in gross misconduct.
Takeaways
It is reasonable to expect that the enactment of the CHOICE Act in Florida may lead other states (including New York, and as is currently the case with California) to apply their own laws to any contracts governing employees located in their jurisdictions and otherwise invalidate any choice of law or choice of forum provisions that call for the application of non-compete laws that are contrary to their own non-compete laws. Absent a federal non-compete law, or a revival of similar ban that was introduced by the U.S. Federal Trade Commission last year (which never took effect), we can expect to see a continuing trend towards polarizing approaches by state legislatures regarding non-competition covenants, leaving employers to navigate an increasing divergent mosaic of restrictive covenant laws across the United States.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
