In a striking act of self-sabotage, Florida is on the verge of embracing a policy that will cripple its ability to compete for talent, ideas and investment. The CHOICE Act — recently passed by the Florida Legislature and awaiting Gov. DeSantis’ signature — would give the state one of the most anti-competitive noncompete regimes in the nation. Far from fostering a business-friendly climate, this bill would undermine Florida’s entrepreneurial dynamism.
At its core, the CHOICE Act extends the allowable duration of noncompete clauses to four years for employees earning over twice the mean wage in their county, eliminating the requirement for employers to demonstrate a legitimate business interest before enforcing them. In practice, this means skilled workers like engineers, software developers and other professionals could be blocked from starting businesses, switching jobs or launching new products in their field.
Unlike Florida, most states are enacting policies to restrict or outlaw the use of noncompetes, and for good reason. When policymakers restrict employer use of noncompetes, innovation flourishes. After Hawaii banned noncompetes for tech workers in 2015, new startup formation in the sector surged by over 10%. Most of these new companies were founded within two years of the ban’s enactment — strong evidence that the prohibition unleashed pent-up entrepreneurial energy previously stifled by noncompetes.
Contrast that with what we see in states that rigorously enforce noncompete clauses. These states experience less entrepreneurial growth, lower productivity and higher rates of skilled workers abandoning their fields altogether. Economists estimate that strict noncompete enforcement reduces patenting by at least 16% over a decade. And it makes inventors 67% more likely to leave their industries of expertise, cutting their innovative output by nearly a third.
But the CHOICE Act takes things even further. Unlike other states, Florida’s bill would force workers to seek permission from their former employers before taking virtually any new job. If the employer objects, courts would be required to issue an injunction to legally bar the employee from working. This system would create a chilling effect preventing workers from applying for other jobs.
Proponents of the bill argue that noncompetes are necessary to protect trade secrets and other proprietary information. But employers already have a wide array of other legal tools to safeguard sensitive data, and noncompete agreements add very little to these protections. In one recent field experiment involving over 14,000 job offers and two competing finance firms, a team of economists found that employees bound by only a nondisclosure agreement were no more likely to leak confidential information than employees bound by both a noncompete and a nondisclosure agreement. The reason is that employees who are inclined to violate a nondisclosure agreement are also inclined to violate a noncompete.
What noncompetes do reliably achieve is suppressing wages and locking people into jobs they would otherwise leave. The same study found that noncompete agreements reduced job mobility by at least 30% and lowered wages by at least 17%. In this light, the argument that noncompetes are about protecting confidential information is mostly a pretext for their true purpose of preventing employees from pursuing better opportunities.
Florida is one of the fastest-growing states in the country, with enormous potential to compete for the nation’s top talent. But the CHOICE Act would stall the state’s momentum by handcuffing the very people who make discoveries, build new industries and challenge the status quo. Although the CHOICE Act can restrict Florida’s brightest minds from moving jobs, it can’t stop them from moving states. DeSantis should veto the CHOICE Act before it drives Florida’s top talent — and future — across state lines.
Sam Peak is the labor and mobility policy manager at the Economic Innovation Group.
