Beware of entrepreneurs, it looks like it will be difficult to start a business in Florida. Gov. Ron Desantis will sign the Dupplicative -Damed Choice Act, a law that greatly expands the ability of businesses to enforce non-competitiveness on employees. As a result, there will be fewer work opportunities, fewer corporate growth, and fewer innovations across the state.
Non-competition is exactly what you hear. It’s a contract that curbs competition. They prevent workers from accepting competitive offers or starting rival companies. Under new Florida law, employers can keep workers out of the market for four years without paying them. This has resulted in workers being trapped, unable to pursue better career opportunities, and without leverage to assert fair working conditions.
However, workers are only the most obvious victims of non-competitors. Companies and ultimately consumers are suffering too. This is because a dynamic economy relies on the mobile labor market where talented workers can freely create new businesses, and the freedom to hire talents that require new businesses. This is especially true in sophisticated, cutting-edge industries.
California proves its point. Known for its vibrant high-tech industry and thriving startups, Golden State is the largest economy in the United States that categorically bans non-competitors. Its flexible labor policy has fueled the rise of Silicon Valley and continues to make California the nation’s leader in innovation and technology.
Over a decade of economic research demonstrates this relationship. Research shows that non-competition hampers growth, limits business entry, suppresses wages, reduces worker productivity and motivation, hurts small businesses, and worsens consumers.
Policymakers began taking notes. More than 20 new state laws are being called for, seeking to limit non-competitive use. Mostly partisan efforts. This year, Ohio Republican Louis Blessing introduced a state bill that would completely ban non-competitors. Former Florida Republican Sen. Marco Rubio is a non-competitor critic and co-hosted a Congressional bill banning several non-competitors. Andrew Ferguson, current Trump-appointed Federal Trade Commission chair, has vowed to pursue non-competitors who think they are bad for the economy, despite their distance from Biden-era restrictions.
Meanwhile, Florida is running in the opposite direction. And it’s not the first time. Sunshine State is already infamous for having the laws of Pronon Pete, the most anti-worker in the country. Prior law since 1996 was the subject of widely cited empirical research documenting the downward impact of non-competitive enforcement on small and medium-sized businesses. But Florida is doubling its proven bad policies rather than taking data into consideration.
Ironically, Florida styles its own state of freedom of work. It is also one of the most powerful advocates of employment. In a willful state, businesses and workers can terminate employment at any time for any reason. It’s a strict rule, especially for workers, but it’s justified in the name of market flexibility. On the surface, it gives both workers and employers the freedom to abandon existing relationships in favor of a better job match.
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Non-competition without trading. Employers can continue to fire workers at any time. However, workers who work under these constraints cannot leave their work without leaving their work. The results hamper the balance of willful rules, and Florida’s freedom to win awards is very contradictory to freedom.
So why did Florida pass this self-contradictory anti-market law? Because despite their harm, non-competition gives some players a short-term advantage. Established companies can retain their existing workforce through the threat of litigation rather than compete with their rivals or their employees. In fact, Florida’s new act was defended by hedge fund billionaires and DeSantis’ allies. Sadly, the bill sailed through Parliament without taking into account the wider, long-term economic impacts entirely.
While selection methods may please a handful of established companies, the benefits are temporary and at a significant cost to Florida’s future. For talented workers, innovators and entrepreneurs, the only “choice” is to leave the nation for a more favorable economic situation.
Rachel Arnow Richman is a professor of law and chair of Gerald A. Rosenthal’s Labor and Employment Law and the University of Florida Levin University School of Law. She wrote extensively and consulted on noncompetitive reforms.