Citadel Lobbies for Four-Year Non-Competes in Home State of Florida

Ken Griffin’s Citadel is putting its Florida lobbying muscle behind an effort to allow four-year non-compete clauses and garden leaves in its home state, tightening employers’ hold on well-paid staffers and executives considering defection.

The bill has cruised through the legislature and is awaiting the governor’s signature, with supporters saying it will make the state more appealing to companies at risk of losing an edge if key employees jump to rivals.

The measure allows four-year restrictions in contracts with people earning at least double the average local wage — typically more than $140,000 in urban areas. It also accelerates court orders blocking defectors from performing similar work elsewhere or barring competitors from hiring them.

Griffin’s lobbyists helped shape the bill’s language and have advocated for it alongside broader business groups including the Associated Industries of Florida, which supported it in legislative hearings, according to people with direct knowledge of the effort, who asked not to be named discussing nonpublic talks. The measure isn’t limited to the financial industry.

A spokesperson for Citadel declined to comment. A representative for the AIF, which doesn’t disclose its members, didn’t respond to a message seeking comment.

“It’s extremely friendly toward employers,” said James Valentino, an employment lawyer with Clayman Rosenberg Kirshner & Linder. “Florida is known for that, but this takes it to a different level.”

It’s the latest show of the billionaire investor’s influence in his new home state, where he has made himself the de-facto leader of Wall Street South. Since Griffin, 56, moved Citadel’s headquarters to Miami from Chicago a few years ago, he has shaped local politics and policy through lobbying and millions of dollars in political donations.

For backers, the bill is an attempt to ensure a favorable state-level solution for employers in what’s become a hot topic in labor law after the Federal Trade Commission tried to bar many non-compete agreements last year. The FTC ban was halted in court, but the agency is appealing. Meanwhile, dozens of states have followed the agency’s lead, floating laws to rein in non-competes.

Talent Wars

At the same time, money managers, flocking to Florida in recent years, are facing severe pressure to head off defections amid their unrelenting fight over talent. Hedge funds are trying to prevent employees from being lured away by rivals dangling upfront bonuses and buyouts on deferred compensation — often paired with non-competes or bonus clawbacks to ensure they stay in their next job.

Citadel has prolonged non-compete clauses for some portfolio managers to 21 months, Bloomberg reported in January. The restrictions had averaged one year in 2020, though some managers had to sit out as long as 18 months to get their deferred compensation.

Citadel Securities, Griffin’s separate market-making business, is also suing two former London-based employees for trade-secret theft after they quit and started their own crypto-trading venture.

Part of Citadel’s role in the bill is reflected in records obtained by Seeking Rents, a local watchdog publication. The documents show Griffin’s lobbyists sent a draft of the legislation to a state representative’s office, affirming that she had agreed to sponsor it. Another email shows Citadel and its lobbyists sought a meeting with the bill’s sponsor on the Senate side.

The measure would allow four-year non-competes that bar employees from doing work at a new employer similar to their job in the previous three years, or from using any information they gleaned. Former employees could also be barred from joining companies or starting businesses in a similar field.

Garden Leave

Alternatively, during a garden leave, employers would continue to pay salaries and benefits to departing workers, essentially sidelining them from the field. The companies wouldn’t have to pay bonuses, which at hedge funds can make up the lion’s share of annual compensation and potentially stretch into the millions of dollars.

In either case, the bill requires companies to tell employees they have the right to seek legal advice before the clauses take effect.

Non-competes are already allowed in Florida, but the rules aren’t as clear, giving judges leeway to interpret whether the term and scope of clauses are reasonable. For jilted employers, making that case can force them to publicly reveal sensitive information about their operations.

And in practice, courts may allow former employees to continue their new work until the final ruling. The bill, on the other hand, would require courts to issue a preliminary injunction when the case is filed.

“The burden of proof is shifted,” said Sam Peak, the labor and mobility policy manager at the Economic Innovation Group, a Washington think tank. “It sways the deck in favor of the incumbent employer.”

‘Whose Bidding?’

House sponsor Traci Koster has called Florida’s current laws on non-competes “insufficient” in protecting employers with sensitive business information. “It helps cement the state’s reputation as an attractive location to conduct business,” said Senator Tom Leek, another sponsor. Both are Republican.

“Tell me this isn’t a bill just for a billionaire hedge fund guy named Ken Griffin?” Senator Jason Pizzo, an independent, asked during a committee meeting. “Whose bidding are we doing here?” Leek responded that they were “doing all the stakeholders’ bidding.”

Koster and Leek didn’t respond to requests for comment, nor did Governor Ron DeSantis’s office.

Even if garden leaves help departing employees keep their lights on, restrictions can damage careers, preventing people from growing into new roles outside their current companies, said Valentino, the employment lawyer.

“It can be a huge detriment that limits your marketability down the road,” he said. “You’re being asked to sit out for a really long period.”

Photo: Miami’s financial district. (Saul Martinez/Bloomberg)

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