21 States with 66 Pending Noncompete Bills: Florida

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Legislative activity is picking up again, and therefore so are we.

This year, there have been a total of 67 noncompete bills in 22 states,1 plus four pending federal noncompete bills and a bill to rein in D.C’s new law before it becomes effective (which is anticipated to be in April 2022). And, of course, the FTC and DOJ are continuing to evaluate whether they can and should regulate noncompetes and other restrictive covenants.

Of the 67 bills this year, one bill2 (in Mississippi) has already died, so we are looking at 66 bills pending in 21 states — Florida, Hawaii, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Missouri, New Hampshire, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Vermont, Virginia, West Virginia, and Wisconsin — plus one in DC.

Four of the bills involve proposed bans, 16 involve low-wage worker thresholds, 12 involve notice provisions, 26 involve the healthcare industry, eight are Covid-related, and nine include fines for violations. We will be drilling down on all of these.

In this series, we provide details on all pending bills — and we will be updating our Changing Trade Secrets | Noncompete Laws page accordingly. Note that the summaries are (sort-of) color coded for the nature of the bill (ban, modification or establishment of standards, reversal of prior changes) and the groups for whom it creates exceptions or specific limitations (medical, low-wage workers, others).

Today’s update: Florida.

Florida has the following four pending bills:

Prefiled on November 5, 2021, and introduced on January 28, 2022, the bill would mandate that “[a] restrictive covenant in an employment agreement between a physician and a hospital is not supported by a legitimate business interest if it does not include an option for the physician to buy out of the restrictive covenant.” The bill, which would apply to restrictive covenants entered into on or after July 1, 2022, is supported with a proposed finding “that a restrictive covenant without this option limits patient access to physicians and increases costs and is void and unenforceable.”

The bill has passed the Senate Committee on Commerce and Tourism and the Senate Committee on Health Policy and is currently pending before the Senate Rules Committee.

Introduced on January 11, 2022, the bill provides that a restrictive covenant (excluding “a covenant that prohibits disclosing a trade secret of the employer to third parties” and a restrictive covenant in connection with certain sale-of-business-type transactions) entered into on or after July 1, 2022 “is only enforceable against a former employee, agent, or independent contractor who voluntarily resigns or is terminated because of misconduct.” Further details include:

      • “Misconduct” is defined as “all misconduct warranting involuntary termination, regardless of whether the misconduct occurs at the workplace or during working hours, and includes, but is not limited to, the following, which may not be construed in pari materia with each other:
        1. Conduct demonstrating conscious disregard of an employer’s interests and found to be a deliberate violation or disregard of the reasonable standards of behavior which the employer expects of his or her employee, agent, or independent contractor. Such conduct may include, but is not limited to, willful damage to an employer’s property that results in damage of more than $500, or theft of employer property or property of a customer or invitee of the employer.
        2. Carelessness or negligence to a degree or recurrence that manifests culpability or wrongful intent or shows an intentional and substantial disregard of the employer’s interests or of the employee’s, agent’s, or independent 39 contractor’s duties and obligations to his or her employer.
        3. Chronic absenteeism or tardiness in deliberate violation of a known policy of the employer or one or more unapproved absences following a written reprimand or warning relating to more than one unapproved absence.
        4. A willful and deliberate violation of a standard or regulation of the state by an employee, agent, or independent contractor of an employer licensed or certified by the state, which violation would cause the employer to be sanctioned or have its license or certification suspended by the state.
        5. A violation of an employer’s rule, unless the employee, agent, or independent contractor can demonstrate that: a. He or she did not know, and could not reasonably know, of the rule’s requirements; b. The rule is not lawful or not reasonably related to the job environment and performance; or c. The rule is not fairly or consistently enforced.
        6. Committing criminal assault or battery on another employee, or on a customer or invitee of the employer, or committing abuse or neglect of a patient, resident, disabled person, elderly person, or child in her or his professional care.”

The bill is pending in the House Regulatory Reform Subcommittee.

Introduced on January 16, 2022, the bill is the House analogue to S.842 (discussed above).

The bill is currently pending before the House Finance & Facilities Subcommittee of the House Health & Human Services Committee.

Introduced on January 26, 2022, the bill is the Senate analogue to H.1191 (discussed above). However, the Senate Committee on Commerce and Tourism substituted a bill, which expands on the types of terminations of employment for which a restrictive covenant can and cannot be enforced. Specifically, the bill:

      • provides that “[a] restrictive covenant is only enforceable against a former employee, agent, or independent contractor who voluntarily resigns, is terminated for misconduct, or does not satisfy reasonable performance standards or goals which were set in advance.”
      • makes clear that that “termination or resignation of an employee following a substantial unanticipated change in market conditions is not a termination for the failure to satisfy reasonable performance standards or goals.”
      • also makes clear that “[a] resignation resulting from a constructive termination is not voluntary.”

The committee-substituted bill is in the Senate Committee on Commerce and Tourism.

 

Next up: Georgia

 

And remember, if you want to see a summary of the current noncompete law in any state (and D.C.), please refer to our 50-state noncompete chart, which is updated on a continual basis, as the laws change.

*A huge thank you to Erika Hahn for all of her extraordinary help in tracking and monitoring all of the bills. 

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[1] The 22 states are: Florida, Hawaii, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Mississippi, Missouri, New Hampshire, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Vermont, Virginia, West Virginia, and Wisconsin. It bears mention that four states — Montana, Nevada, North Dakota, and Texas do not have regular legislative sessions this year.

[2] The bill was directed toward professional employer organizations (“PEOs”) and only touched on restrictive covenants, insofar as it expressly would have left restrictive covenants unaffected.

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