Garden Leave: A US Employer Guide to Paid Notice
Garden leave keeps a departing employee paid and away from customers and systems through notice. How it works in the US and when it beats a non-compete.
The first time somebody senior resigned on me, I had him out of the building inside two hours. Badge back, laptop back, a short note to the team. I thought I was being decisive. What I had actually done was hand a competitor a fully rested employee, at my own expense, several weeks early.
He started at that competitor eleven days later. Nothing about it was unlawful. He had signed a restrictive covenant in a state that treats most of them as void, which I had not checked, and even in a state that enforces them I would have needed a lawyer, a judge and months I did not have.
Garden leave is the other answer to that problem, and almost no small American employer has heard of it, because the phrase is British and still sounds like it belongs there. Strip the accent off and the mechanism is plain. The person is still your employee, still on your payroll, and not in your building. Here is how to make it work in the US.
I build the HR and people records tooling for companies with no HR department at FirstHR. This is general information rather than legal advice, and restrictive covenants are the corner of employment law where state variation is widest, so a clause like this deserves a lawyer before it goes into a contract.
What Garden Leave Is
Garden leave is a paid notice period during which the employee is required to stay away from work. Employment continues to a fixed end date, salary and benefits continue with it, and the employee is barred from customers, systems, files and colleagues for the whole run.
The purpose is time, and time only. Customer relationships cool. Market intelligence goes stale. Prices, roadmaps and pipeline numbers become last quarter’s. A replacement gets hired and briefed while the outgoing person is still available to answer questions by email.
The cost is equally plain. You are paying full salary for output you have deliberately switched off, and you are doing it at the exact moment you also have to pay somebody to do the job. That is why the clause belongs in a small number of contracts rather than in a handbook, and why the length of the notice period matters more than the fact of having one.
The other thing that travels with it is easier to miss: until the notice period ends, the person is still an employee for every purpose your other policies use that word. Anyone drafting the clause has to price that in alongside the salary.
Not Suspension, Not Severance, Not a Furlough
Garden leave sits in a family of arrangements that look alike from the outside and behave very differently in payroll, benefits and unemployment. The dividing questions are simple: is the person still employed, and is anyone still paying them?
| Arrangement | Still employed? | Paid? | What it is actually for |
|---|---|---|---|
| Garden leave | Yes, to the end of the notice period | Yes, full salary and benefits | Keeping a departing employee away from customers, systems and colleagues while the clock runs out |
| Paid suspension | Yes | Yes, normally full pay | A holding position during an investigation, with the person expected back if nothing is found |
| Furlough | Yes | No wages, benefits often continue | A temporary halt in work with a genuine intention of bringing the person back |
| Severance | No, employment has ended | Yes, usually for a signed release | Money paid after the relationship ends, tied to an agreement rather than to a notice period |
| Pay in lieu of notice | No, employment ends at once | Yes, as a payment covering the notice | Ending the relationship immediately and paying out what the notice would have cost |
The difference from a furlough is money: a furlough removes the work and the wages, while garden leave removes only the work. The difference from suspension is intent. A suspended employee is expected back at their desk; a person on garden leave has an end date already written down.
The difference from a severance package is the one that changes the most downstream mechanics. Severance is post-employment money, normally exchanged for a release of claims, and the recipient is free to start elsewhere immediately. Garden leave is salary, paid because the job has not ended yet.
That distinction runs straight through your payroll and benefits administration. Continuation coverage is triggered by the end of employment rather than by the start of the notice period, so no continuation notice goes out on the day somebody resigns and the person stays on your regular group plan throughout.
The last-day rules key off the same date. Final paycheck deadlines start running on the last day of employment, which is the day the notice period expires rather than the day the resignation arrived. Accruals, vesting and bonus eligibility keep behaving as though the person still works there, because they do.
The unemployment picture changes too. Somebody receiving full wages under a live employment relationship is not in the position an unemployment claim normally contemplates, and state agencies count what you pay during the period as wages. Do not treat that as a rule for your state without checking, but do not budget for garden leave as though it were severance either.
They Are Still an Employee, With Everything That Carries
The whole legal strength of garden leave comes from one fact: the employment relationship has not ended. Every duty an employee owes their employer stays alive, and so does every duty you owe them.
On the employee’s side, the duty of loyalty continues at common law for as long as the relationship does. Soliciting your customers, recruiting your staff, or running a competing operation during the notice period is a breach of an existing obligation, not a post-employment restraint you would have to prove was reasonable. That is a materially easier argument to make.
Confidentiality works the same way as loyalty, and it sits on top of whatever confidentiality agreement you already have. So does the acceptable use policy governing your systems, which is exactly why cutting access on day one is defensible: you are not punishing anybody, you are removing a tool from someone who no longer has work to do with it.
On your side, pay and benefits run in full, and for an exempt employee federal law reinforces part of that. An exempt employee must receive the full salary for any week in which they perform any work. You also cannot make deductions for absences caused by you or by the operating requirements of the business when the employee is ready, willing and able to work (29 CFR 541.602).
Read the rest of that rule before you lean on it. The same regulation says an exempt employee need not be paid for a workweek in which they perform no work at all, which is precisely the shape of a long garden leave. The obligation to keep paying comes from your contract, not from the wage and hour rules.
Garden Leave Set Against the Non-Compete
These are two answers to the same question, and they fail in opposite directions. A non-compete agreement restrains somebody after they stop being yours, costs nothing until you try to use it, and needs a court. Garden leave restrains somebody who is still yours, costs full salary immediately, and needs nobody’s permission.
| How it behaves | Garden leave | Non-compete |
|---|---|---|
| The worker is paid for the whole restricted period | ||
| The restriction operates during employment rather than after it | ||
| Confidentiality and the duty of loyalty apply automatically | ||
| You can cut off systems, email and customer contact yourself | ||
| Available in states that void post-employment restraints | ||
| You keep paying even if the person never intended to compete | ||
| The restraint continues after the payments stop | ||
| Enforcement normally requires going to court |
Read rows six and seven as the honest case against garden leave. It is expensive, it stops the day the money stops, and it does nothing about the eighteenth month. If what you fear is a competitor being built two years from now, paid notice will not touch it.
Read the other six as the case for it. The thing that makes a non-compete fragile, the fact that it operates against a free person after the relationship has ended, is the exact thing garden leave avoids. You are not asking a judge to restrain a stranger. You are administering an employment relationship you are still funding.
In practice the two stack rather than compete. A contract can require ninety days of paid notice and then a short, narrowly drawn restraint afterward, with the paid period counting toward the total restricted time. Florida has legislated exactly that structure, requiring a covered non-compete period to shrink day for day against the nonworking part of a garden leave notice period.
Why Paid Notice Fares Better Than an Unpaid Restraint
Courts and legislatures have never liked restraints that leave a worker unable to earn. Paying through the restricted period removes the objection that carries the most weight, which is why several recent state laws converge on the same idea: you may restrain, if you pay.
State law is now where the whole question lives, and it moves every year. The table below reflects the position as this was written; treat it as a map of the patterns rather than as a substitute for checking the statute in the state where the employee actually works.
| State | What the law does | The paid-notice angle |
|---|---|---|
| Florida | The CHOICE Act, in force since August 15, 2025, created covered garden leave agreements at Florida Statutes 542.44 | Notice of up to four years, same salary and benefits as the last month before notice, and no services required after the first ninety days |
| Massachusetts | The Noncompetition Agreement Act governs agreements signed since October 1, 2018 | A non-compete must be supported by a garden leave clause paying at least half of highest annualized base salary, or other agreed consideration |
| Oregon | Non-competes are capped at twelve months and limited to salaried administrative, executive or professional staff earning above an indexed income figure | An employer can still reach a worker under that income figure by paying, for the restricted period, the greater of half their base salary and commissions at termination or half the indexed figure |
| Washington | Every noncompetition covenant is void effective June 30, 2027, whenever it was signed. Until then, a covenant reaches only workers with annualized earnings above a statutory floor of $100,000 that Labor and Industries indexes each year, $126,858.83 for 2026, and is presumed unreasonable beyond eighteen months | Until the ban takes effect, a laid-off worker can be held to one only if paid base salary for the enforcement period, less outside earnings |
| Colorado | Non-competes reach only highly compensated workers, set at $130,014 in the 2026 PAY CALC Order | Customer non-solicitation requires sixty percent of that figure, $78,008.40, so the price of any restraint is a real salary |
| Wyoming | Senate File 107 voided most non-competes entered on or after July 1, 2025 | An exception survives for executive and management personnel and their professional staff, which is where paid notice fits |
| California, Minnesota, North Dakota, Oklahoma | Post-employment non-competes are void in substantially all employment | Payment does not rescue the restraint. A notice period that runs during employment is a different question and still needs local advice |
| New York | No general statute; a narrow one protects non-management broadcast employees. A broad ban passed the legislature and was vetoed on December 22, 2023 | Bills since have paired any surviving restraint with a pay floor |
Florida is the one to read if you want to see the idea fully drawn. Its statute lets a covered agreement require up to four years of advance notice and requires the same salary and benefits the employee had in the month before notice began. It also relieves the employee of any obligation to provide services after ninety days and lets the employer shorten the period on thirty days of written notice (Florida Statutes chapter 542).
The Florida statute covers only employees earning more than twice the annual mean wage of the county where the employer has its principal place of business, or of the employee’s own county if the employer sits outside Florida. Health care practitioners are excluded outright.
Massachusetts approached it from the other end. Rather than authorizing garden leave, it made a version of it the price of a non-compete: an agreement must be supported by a garden leave clause paying at least half of the employee’s highest annualized base salary from the prior two years, or by other consideration the parties agree and write down (Massachusetts General Laws chapter 149, section 24L).
The Massachusetts statute also caps most restraints at twelve months and requires that the agreement reach the employee by the earlier of a formal offer or ten business days before work starts. The agreement must state the employee’s right to consult a lawyer, and a non-compete is unenforceable against nonexempt employees, student interns, workers aged eighteen or younger, and anyone terminated without cause or laid off.
Three more states gate the restraint on what the worker earns. Washington voids every covenant effective June 30, 2027. Until then, it voids any covenant against an employee earning under $126,858.83 in 2026. Colorado reaches only workers earning at least $130,014 under its 2026 PAY CALC Order, the threshold its non-compete statute borrows.
Oregon makes the trade explicit: bind somebody below its income line and you owe them, for the whole restricted period, the greater of half their base salary and commissions at termination or half that line.
The At-Will Problem You Have to Solve First
The first problem is that none of this works without a contract, and almost no American employee has one. At-will employment means either side can end the relationship at any moment for any lawful reason, which means your team can resign on a Friday and start somewhere else on Monday. There is no notice period to pay through unless somebody wrote one.
The second problem is what happens if the employee simply refuses. No American court will order a person to remain in a job. In Bear, Stearns & Co. v. Sharon, a 2008 federal case in Massachusetts, a brokerage sought to enforce a ninety-day paid notice clause against a departing broker who had gone straight to a competitor.
The court found the firm likely to win on its breach of contract claim. It still refused a preliminary injunction, the early court order made before a case is decided, in part because the effect would have been to compel an employment relationship the broker no longer wanted. The claim survived. The clause did not put him back at his desk.
So the honest description of a notice clause is this: it gives you a contractual claim, a lawful basis to keep paying and restricting anyone who complies, and a great deal of practical weight in the conversation that follows a resignation. Most people comply because the alternative is walking away from a quarter of paid salary and starting a new job in a lawsuit.
Florida’s statute goes further for the agreements it covers. When an employer applies to enforce a covered garden leave agreement, a court must preliminarily enjoin the employee from providing services to anyone else during the notice period, which is the order the Massachusetts court declined to give. Even that order cannot make the employee work for you.
The third problem is consideration: what the employee gets in return for agreeing to the new term. Adding a notice clause to an existing employee’s terms is a change to the bargain, and states differ sharply on whether continued employment is enough to support it.
The clean moments to introduce a notice clause are hiring, promotion, and any point where real money changes hands, which is one reason it usually rides along with executive compensation rather than arriving on its own.
Make the obligation mutual while you are there. A clause requiring the employee to give ninety days and permitting you to end the relationship without notice reads as one-sided to everyone who will ever look at it, including the judge. Mutual notice is fairer, more persuasive, and costs you very little given how rarely you will use your own side of it.
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Paid notice earns its cost in a narrow band of roles: people who carry client relationships, people who hold commercially sensitive information, and people whose departure would otherwise be instantly visible to a competitor. For everyone else it is an expensive answer to a problem you do not have.
Do the arithmetic before you write anything. Take the salary you would pay for a ninety-day notice period, and set it against the realistic cost of the accounts you might lose in the same ninety days without one. For a founder-level salesperson that is not a close call. For a mid-level individual contributor it usually is.
The other thing to weigh is what the clause does to hiring. A senior candidate reading a ninety-day notice requirement is reading a constraint on their next move, and some will price it into what they ask for. That cost is real, and it is a good reason to keep the period as short as the risk allows.
How to Write the Clause
A usable garden leave clause does five things: it creates a notice obligation, it gives you the option rather than the duty to remove the person from work, it fixes pay and benefits at their existing level, it says plainly what the employee may and may not do, and it lets you shorten the period. The last three steps handle the edges around the clause.
Two drafting habits are worth stealing from the states that have legislated. Give the employee a written right to consult a lawyer and a real window to do it, which Massachusetts requires and Florida builds into its seven-day review period. And never write a clause that lets you stop paying while the restriction continues, because that converts paid notice into the unpaid restraint you were trying to avoid.
Running the Notice Period Without Creating a Claim
Once somebody is on garden leave, the risk shifts from drafting to administration. The employee is still employed, so everything you do to them during the period is an employment act, judged by the same standards as any other.
Most of that administration is settled by the letter the employee receives on day one, which is why it is worth writing once rather than drafting under pressure. The version below fixes the dates, states what you will keep paying, lists what you are asking the person not to do, and says plainly that this is not a suspension.
Handle access on the first day and handle it neutrally. Revoke system and file access, redirect email to a named manager, and collect equipment against your IT offboarding checklist rather than improvising. Doing it the same way every time is what makes it administration instead of a message.
Tell customers yourself, early, in writing, and without editorializing. A short note saying who now owns the relationship, copied to the departing employee where the relationship is warm, does more to protect the account than any clause. The point of buying the time was to make that call before somebody else did.
Tell your team something true. People notice an empty chair, and a vacuum fills with worse information than you would have supplied. A sentence confirming the person is leaving, that a handover is under way, and who to go to in the meantime is enough, and it belongs in the same register as the rest of your offboarding process.
Keep paying on the normal schedule and keep the record straight. The person stays on the payroll, in the benefits census and in the employee record until the notice period expires, at which point the ordinary termination steps run: final pay by your state’s deadline, continuation coverage notices, and the exit paperwork. A system that already holds contracts, employee records and dates in one place at FirstHR makes that transition a task list rather than a memory test.
One temptation to resist. Do not use the period to build a case against somebody or to monitor them more closely than you would any other employee, because that turns a clean commercial arrangement into the beginning of a claim. If there is misconduct, investigate it properly; if there is not, pay the notice and let the clock run.
Nick Anisimov, FirstHR founder
Frequently Asked Questions
What is garden leave in the US?
Garden leave is a contractual notice period that the employer pays in full while requiring the employee to stay away from the workplace. The person remains employed to the end of the notice period, keeps salary and benefits, and keeps every obligation that attaches to employment, including confidentiality and the common law duty of loyalty. What they lose is access: customers, systems, files and colleagues. In the United States garden leave is a creature of contract, which means it exists only if somebody wrote it into an employment agreement before the resignation arrived. There is no federal garden leave law and, outside a small number of states, no state law either. Florida is the clearest exception, having codified covered garden leave agreements in 2025.
Is garden leave the same as severance?
No, and the difference is the employment relationship itself. Severance is money paid after employment has ended, usually in exchange for a signed release of claims, and the person is free to start somewhere else the next morning. Garden leave pay is ordinary salary for a job that has not ended: the notice period is still running, the person is still on your payroll, and the restrictions that bind an employee still bind them. That distinction drives several practical consequences. Benefits continue rather than converting to continuation coverage. The final paycheck clock does not start. Equity and bonus terms tied to active employment keep running. And because wages are still being paid, a person on garden leave usually does not fit the situation an unemployment claim assumes.
Do you still get paid during garden leave?
Yes. Pay is what makes the arrangement work, not an optional courtesy. A clause that let the employer stop the salary while keeping the restrictions in place would no longer be garden leave, and in the states that regulate the practice it would fail outright. Under a covered agreement, Florida requires the employer to keep paying the salary and providing the benefits the employee received during the month before the notice period began. Massachusetts sets the floor for a garden leave clause that supports a non-compete at half the highest annualized base salary paid in the previous two years. Federal wage law only goes part of the way. An exempt employee who does any work in a given week is owed that week’s full salary, and the employer may not deduct for an absence it caused, yet a week with no work at all requires no salary under the same rule. Through a long notice period, then, the paycheck depends on the employment contract rather than on federal wage law.
Can a US employer force an employee to serve a notice period?
No. Courts in the United States will not make a person keep working for you, and outside Florida a broken notice period usually ends in a claim for money rather than a court order. Bear, Stearns & Co. v. Sharon, decided by a federal court in Massachusetts in 2008, shows the pattern. A broker walked out on a ninety-day paid notice clause, and the judge found that the firm would probably win its contract claim, yet denied a preliminary injunction, partly because the order would have bound the broker to an employment relationship he had chosen to leave. Florida’s CHOICE Act works differently for the higher earners it covers: when the employer asks a court to enforce a covered garden leave agreement, the court must issue a preliminary injunction barring the employee from working for anyone else until the notice period ends. What the clause buys you in any state is a breach of contract claim, the legal footing to keep paying and restricting an employee who goes along with it, and real bargaining power once the resignation lands. It never buys you someone at their desk against their will.
Is garden leave better than a non-compete?
It solves a narrower problem better and a wider problem worse. Garden leave protects the weeks immediately after a resignation, which is when most damage happens, and it works through a relationship you already control rather than through a court. It can still operate in states that void post-employment restraints, because the restriction runs during employment rather than after it. Even in those states, though, a notice period stretched out purely to sideline somebody invites scrutiny. Its limits are equally clear: it costs full salary for someone producing nothing, it ends when the payments end, and it depends on a written agreement that most small-company employees do not have. A non-compete costs nothing until it is used, reaches further in time, and is void or sharply limited in a growing list of states. Many employers who can afford both use paid notice first and a short restraint after.
Which states have garden leave laws?
Florida and Massachusetts both name it in statute, while others reward paid restraint without using the term. Florida’s CHOICE Act, in force since August 15, 2025, lets employers sign higher earners to covered garden leave agreements with notice periods as long as four years, during which the employee keeps full salary and benefits and owes no work once the first ninety days have passed. Since October 2018, Massachusetts has made a garden leave clause, or other consideration both sides agree to, the condition for a non-compete. Oregon lets an employer hold a worker who earns less than its indexed income threshold to a non-compete, provided it pays them, for the restricted period, the larger of two amounts: half of their base salary and commissions when they left, or half of the threshold. In Washington, every non-compete becomes void on June 30, 2027, and until then a laid-off employee can be bound only if the employer keeps paying base salary through the enforcement period. In the remaining states, the answer comes from contract law.
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