By Elena Vetter
No CHOICE But to Not Compete Under Florida’s New Statutory Scheme
The Sunshine State opting to do its own thing is hardly news. But the recent Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act, effective as of July 1, puts Florida in a league of its own when it comes to restrictive covenants.
You know from prior newsletters that many states—and some federal agencies—have recently attempted to limit restrictive covenants. Florida, though, has decided to move in the opposite direction. The CHOICE Act actually increases employers’ ability to enforce non-compete agreements against employees who earn more than twice the average wage in the county where they live or where the employer’s principal office is located.
Florida law used to require employers to prove enforceability of a non-compete agreement by showing (1) a written agreement signed by the employee; (2) a legitimate business reason necessary to protect the employer; and (3) reasonable limitations on the duration, geographic scope and business restrictions contained in the covenant. The CHOICE Act turns that showing on its head. Now, an employee must be the one to show an agreement is unenforceable. Under the Act, not only are covered non-compete agreements presumed to be enforceable, but courts must issue a preliminary injunction to enjoin a covered employee from violating a restrictive covenant.
The CHOICE Act also provides a slew of statutory protections for employers seeking to enforce garden-leave agreements – which are agreements that require employees to provide advance notice of their resignation, during which time they remain on payroll and may not work elsewhere. Employers may now require employees to provide up to four years of advance notice of their resignations. If that sounds like a mind-boggling extension on the generally accepted two weeks to you, your instinct is right: four years actually exceeds the median job tenure of an American worker.
Even companies not based in Florida may be affected by this legislation. If you employ a Florida resident—and that employee is covered by the CHOICE Act—the CHOICE Act will be the statute a Florida court applies when reviewing your restrictive covenants, even if your company is based elsewhere.
Don’t You Dare Roll the Tape, Says the NLRB
The National Labor Relations Board (NLRB) has put its foot down. On June 25, the Acting General Counsel of the NLRB issued a new memorandum declaring that any party that surreptitiously records collective bargaining negotiations has violated the National Labor Relations Act (NLRA). Though the memorandum, which is addressed to the agency’s regional directors, is not legally binding, it clarifies a new enforcement priority for the NLRB. Employers who suspect they’ve been recorded during collective bargaining sessions may now have recourse through the agency.
The memorandum declares that “a party which secretly records collective-bargaining session(s) commits a per se violation of the duty to bargain in good faith under both Sections 8(a)(5) and 8(b)(3) of the Act.” Why? “The use of surreptitious recordings during the collective-bargaining process is inconsistent with the openness and mutual trust necessary for the process to function as contemplated by the Act,” the General Counsel states. Invoking precedent that prohibits parties from insisting to an impasse that they should be allowed to bring a court reporter to labor negotiations, the General Counsel concluded that the logical extension of that precedent is that secret recordings of negotiations are also impermissible. “It would be incongruous indeed if one could avoid the illegality of insisting on recording bargaining sessions simply by secretly recording the same sessions,” the General Counsel writes. Moreover, not only does “recording individuals at bargaining sessions without knowledge or consent” constitute “a breach of trust,” but doing so also “undermin[es] the integrity of relationships and eroding the basic principles of mutual respect and dignity that form the foundation of healthy interactions.”
The lengthy memorandum concludes by stating that its application of the per se standard is both necessary and appropriate: “Any other standard would incentivize the continued surreptitious recording of bargaining session and in doing so, erode trust at the bargaining table, discourage candid dialogue, and create a disincentive for transparency. More significantly, it would stand in tension with the Act’s purpose of promoting collective-bargaining and the Board’s responsibility to protect the conditions necessary for that process to function effectively.”
DOL Issues Two New Field Assistance Bulletins
The Department of Labor (DOL) issued two new guidance bulletins late last month.
The first bulletin, FAB 2025-2, suspends enforcement of the DOL’s 2024 Final Rule as it applies to H-2A temporary agricultural laborers under the Immigration and Nationality Act. As the bulletin provides, now that multiple federal courts have “issued preliminary injunctions affecting the enforcement of the rule in whole or in part,” the “multiple injunctions have created significant legal uncertainty and operational challenges” for agency “staff, regulated employers, and affected workers.” Therefore, the Wage and Hour Division (WHD) will discontinue enforcement of its 2024 Final Rule, effective immediately.
The second bulletin, FAB 2025-3, puts an end to an established WHD practice in pre-litigation unpaid-wage-dispute negotiations. Until recently, when the WHD launched an investigation into a company’s payroll practices, the agency also often initiated early settlement discussions that included not just a demand for the alleged amount of unpaid wages, but also a demand for an additional liquidated-damages sum. Per FAB 2025-3, however, the agency will now retire that practice. The current WHD reading of the FLSA is that liquidated damages are reserved for judicial proceedings only. In effect, that means the WHD will no longer bargain for payment of liquidated damages in administrative matters. Liquidated damages will remain available in litigation.
By Christian Sorensen
The “Big Beautiful Bill” Tax Provisions and Payroll Taxes
We are also pleased to share that our Tax Group will begin providing regular updates on the tax provisions of the “One Big Beautiful Bill” (OBBB). These updates will include in-depth analysis of key provisions related to payroll taxes and credits that are especially relevant to employers, payroll service providers and employees.
Later this month, we will release an update that expands on the following payroll topics:
No tax on Tips
The OBBB introduces a temporary deduction for individuals receiving qualified cash tips in occupations where tipping was customary before Jan. 1, 2025. The deduction is up to $25,000 annually, phasing out gradually for modified adjusted gross income (MAGI) above $150,000 ($300,000 for joint filers). Tips must be reported on IRS-approved forms, and the deduction is available to non-itemizers. The provision became effective on July 4, 2025, and is retroactive to Jan. 1, 2025. It expires after Dec. 31, 2028.
1. No Tax on Overtime. The OBBB also introduces a temporary deduction for individuals receiving “qualified overtime compensation,” defined as overtime pay exceeding the regular rate under the Fair Labor Standards Act. Taxpayers can deduct up to $12,500 annually ($25,000 for joint filers), with a phaseout starting at $150,000 MAGI for single filers and $300,000 for joint filers. The deduction is available to non-itemizers. The provision became effective on July 4, 2025, and is retroactive to Jan. 1, 2025. It expires after Dec. 31, 2028.
2. Extension and Enhancement of Paid Family and Medical Leave Credit
The OBBB makes the credit permanent and allows employers to choose between a credit based on (i) wages paid to employees or (ii) premiums for insurance policies providing paid leave. It clarifies that employees working at least 20 hours per week are eligible and allows employers to elect eligibility for employees with six months of employment. State or local government-mandated leave counts towards eligibility but is not taken into account in determining the credit amount. Aggregation rules treat related persons as a single employer for credit purposes. These changes apply to tax years after Dec. 31, 2025.
3. Enhancement of Employer-Provided Child Care Credit
The OBBB increases the credit percentage for qualified expenditures from 25% to 40% for regular businesses and 50% for eligible small businesses. Maximum annual credits rise to $500,000 for regular businesses and $600,000 for eligible small businesses, with both amounts subject to annual inflation adjustments. These changes are effective for amounts paid or incurred after Dec. 31, 2025.
4. New Enforcement Provisions for COVID-Related Employee Retention Credits (ERC) Because of the amount of fraudulent ERC claims, the OBBB introduces penalties for ERC promoters who fail to meet due diligence requirements with a $1,000 penalty per failure. It limits the availably of new ERC credits or refunds unless the claim was filed before Feb. 1, 2024, extends the assessment period for ERC credits to six years, and expands penalties for erroneous claims to include employment tax. These provisions apply after the OBBB's enactment date of July 4, 2025.
5. Employee Exclusion for Employer Payments of Student Loans
The OBBB makes permanent the employee exclusion for employer payments of student loans. It also introduces an inflation adjustment to the $5,250 annual limit, effective for tax years beginning after 2026. These provisions apply to payments made after Dec. 31, 2025.
6. Increase to Dependent Care Assistance Program’s Tax-free Contribution Limit
The OBBB increases the tax-free contribution limit for dependent care assistance programs from $5,000 to $7,500 annually and from $2,500 to $3,750 for married individuals filing separately. This change is effective for tax years beginning after Dec. 31, 2025.
7. Elimination of Exclusion for Qualified Bicycle Commuting Reimbursement
The 2025 Tax Act permanently eliminates the $20 per month qualified bicycle commuting reimbursement exclusion received by an employee from an employer, which was previously suspended for tax years 2018 through 2025. This is effective for tax years beginning after Dec. 31, 2025.
We encourage businesses to monitor our regular updates and engage with our Tax Group to navigate this evolving tax landscape with confidence.
