This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
Consider a hypothetical Florida acquisition where the real asset is four people. The target is a specialty engineering firm; the founder is selling and retiring, but the value the buyer is underwriting sits with a chief engineer, two senior project managers, and a business development lead who together hold the client relationships. The purchase agreement handles the founder cleanly — a sale-of-business noncompete under § 542.335, running five years, supported by the goodwill being purchased. Then someone asks what happens if the chief engineer resigns in month four and takes two accounts with her. The answer, in most Florida deals drafted before mid-2025, was a two-year employee noncompete of contested enforceability and a retention bonus that vests too slowly to matter.
Florida changed that answer with the CHOICE Act, and most transaction documents have not caught up.
What the statute actually created
The Florida Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth Act — codified at §§ 542.41 through 542.45 — was enacted as chapter 2025-213 and became law without the Governor’s signature. It creates two new instruments that sit alongside, and outside, the familiar § 542.335 framework: the covered garden leave agreement and the covered noncompete agreement. Both are available only for a “covered employee,” defined as an employee or individual contractor who earns or is reasonably expected to earn a salary greater than twice the annual mean wage of the Florida county where the employer has its principal place of business — or of the county where the employee resides, if the employer’s principal place of business is outside Florida.
Two features of that definition matter immediately in deal planning. The salary test uses county mean wage, not a flat statewide number, so the same compensation package can qualify an employee in one Florida county and fail in another. And “salary” is defined narrowly: base compensation on an annualized basis plus the fair market value of non-cash benefits, expressly excluding health care benefits, severance, retirement benefits, expense reimbursement, distributions of earnings and profits, discretionary incentives or awards, and anticipated but indeterminable compensation including tips, bonuses, and commissions. A commission-heavy sales lead whose W-2 looks large may not clear the threshold on base salary alone.
The exclusion that surprises health care buyers is in the same subsection: the term “covered employee” does not include a person classified as a health care practitioner as defined in § 456.001. Physician practice, dental, veterinary, and similar acquisitions cannot use these tools for the practitioners who are usually the whole point of the deal. Those deals stay under § 542.335 and the ordinary reasonableness analysis.
Garden leave is a notice period, not a covenant
A covered garden leave agreement is a written agreement in which the employee and employer agree to up to four years of advance, express notice before terminating the relationship; the employee agrees not to resign before the end of the notice period; and the employer agrees to retain the employee for the duration and to keep paying the same salary and providing the same benefits the employee received in the last month before the notice period began. The employer is not obligated to continue discretionary incentive compensation, and is not obligated to have the employee do any work.
The conditions for enforceability are procedural and specific. The employee must have been advised in writing of the right to seek counsel before execution. The employee must acknowledge in writing receipt of confidential information or customer relationships. And the agreement itself must provide that after the first ninety days of the notice period the employee need not provide services, that the employee may engage in nonwork activities at any time including during business hours, that the employee may — with the employer’s permission — work for another employer during the remainder of the notice period, and that the notice period may be shortened on at least thirty days’ written notice.
The remedy provisions are where this departs sharply from ordinary Florida practice. On application by the employer, a court “must” preliminarily enjoin the employee from providing services to anyone else during the notice period, and “must” preliminarily enjoin the prospective new employer from engaging the employee. The injunction can be modified or dissolved only if the employee or the hiring company establishes, by clear and convincing evidence and using nonconfidential information, one of a short list of defenses — essentially that no similar work or confidential information is involved, that the hiring company is not in a similar business, or that the employer stopped paying and failed to cure. There is a statutory presumption of access to confidential information where the employee has acknowledged it in writing, which is precisely why the acknowledgment is a condition of enforceability. Prevailing parties recover attorney fees and costs, and injunctive relief is expressly non-exclusive.
The noncompete side, and the day-for-day offset
A covered noncompete agreement may run up to four years post-termination within a defined geographic area, restricting the employee from a role providing services similar to those provided during the preceding three years, or a role where it is reasonably likely the employee would use the employer’s confidential information or customer relationships. The same right-to-counsel notice and confidential-information acknowledgment apply, plus a seven-day rule: the employer must provide the proposed agreement to a prospective employee at least seven days before the offer of employment expires, or to a current employee at least seven days before the offer to enter into the agreement expires.
There is one substantive constraint worth pricing. Where the employee also has a garden leave agreement, the noncompete period must be reduced day-for-day by any nonworking portion of the notice period. Buyers who stack a long garden leave on top of a long noncompete do not get to add the two together for the nonworking portion.
The statute’s closing sentence matters as much as anything else in it: any action regarding a restrictive covenant that does not meet the definition of a covered garden leave agreement or a covered noncompete agreement is governed by § 542.335. There is no partial credit. An agreement that misses the salary threshold, omits the counsel advisory, skips the acknowledgment, or is presented on a five-day fuse falls back into the older regime, where a court weighs legitimate business interests, reasonableness in time and area, and the public interest — and where the mandatory-injunction machinery is unavailable.
Why the seven-day clock is a deal-timing problem
Here is where transaction practice collides with the statute. Key-employee retention documents are, by long habit, part of the closing deliverables. The buyer’s counsel circulates employment agreements with the signature packet, the employees sign at or just before closing alongside everything else, and the deal funds. Under the CHOICE Act, a covered noncompete or garden leave agreement presented that way is not a covered agreement, because the seven-day pre-expiration notice was not given. It drops back to § 542.335.
The fix is a scheduling decision, not a drafting one, and it has to be made early. Retention agreements intended to qualify under the CHOICE Act need to be delivered to the employees at least a week before the offer lapses, which in practice means at least a week before closing — which in turn means the buyer is disclosing the transaction to the target’s key employees before signing or shortly after. That is a real cost. It creates leak risk, it gives the employees negotiating leverage at the worst possible moment, and it can require the seller to consent to pre-closing contact that the exclusivity and confidentiality provisions would otherwise prohibit.
Deal teams should be making that tradeoff consciously. The alternatives are to accept § 542.335 treatment for the key employees and structure accordingly, to run the CHOICE Act process post-closing with the retention consideration as the inducement, or to build the pre-closing employee contact into the purchase agreement as a covenant with agreed timing, agreed messaging, and a seller cooperation obligation. Each is defensible. Doing nothing and discovering the problem at the closing table is not.
How this fits with the seller’s covenant and the retention structure
The CHOICE Act does not displace the sale-of-business analysis. The founder’s covenant not to compete, supported by the goodwill purchased in the transaction, still runs under § 542.335 — where, as we have written, sale-of-business restrictions carry a materially longer presumptively reasonable tail than employee restrictions. A selling founder who stays on as an employee may end up with both: a § 542.335 covenant tied to the sale and a covered noncompete tied to the employment, with different durations, different enforcement standards, and different fee-shifting consequences. Those two documents need to be read against each other rather than drafted by different lawyers on different tracks.
Retention economics change too. Because a covered garden leave agreement requires the employer to keep paying full salary and benefits through a notice period during which the employee may be doing nothing, a four-year notice period is a four-year payroll commitment. The practical instrument is shorter — six months to a year of notice on the two or three people whose departure would actually impair the acquired business — paired with a covered noncompete that is reduced day-for-day for the nonworking notice time. Model the cost before writing the term. We have looked at the related question of why buyers demand fresh restrictive covenants from key employees at closing, and the CHOICE Act mostly raises the stakes of getting that step right.
One caution on reach. Both sections apply to agreements with employees whose primary place of work is in Florida regardless of any contrary choice-of-law provision, and to Florida-headquartered employers whose agreements are expressly governed by Florida law. That is an aggressive assertion, and an employee who relocates, or a multistate workforce with a Florida holdco, will generate genuinely contested questions — including whether another state’s courts will honor the result. Florida’s own choice-of-law and public-policy override problems in restrictive covenant litigation have not gone away simply because the legislature raised the stakes. The statutory text is short and worth reading directly at the Florida Senate’s statutes site before anyone drafts to it.
The honest summary is that Florida has handed buyers of Florida businesses the most employer-favorable retention toolkit in the country, and attached a set of procedural conditions that ordinary closing mechanics will violate by default. The drafting cannot guarantee that a key employee stays, but the difference between a covered agreement and one that falls back to § 542.335 is the difference between a mandatory preliminary injunction and a contested reasonableness hearing.
If you are structuring key-employee retention in a Florida acquisition and want the CHOICE Act conditions, the seven-day timing, and the § 542.335 seller covenant coordinated, feel free to reach out to our firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
