Why were changes made to Georgia’s non-compete law?

For many years, Georgia was considered one of the most challenging states for employers when it came to enforcement of non-compete agreements. An employer who failed to specify reasonable geographic or length restrictions would void, in its entirety, the non-compete agreement. In 2010, a constitutional amendment was approved by voters, which authorized legislation to uphold reasonable competitive agreements. As a result, relatively minor issues were no longer a void to a non-compete or agreement. The amendment changed how non-compete agreements and restrictive covenants are enforced in Georgia by giving judges some leeway to strike or modify the unreasonable provisions without voiding the complete agreement.

What agreements does Georgia’s non-compete law affect?

On May 11, 2011, Georgia’s Governor signed into law the new restrictive covenants statute, which covers newly signed non-compete, non-solicit, employee piracy, and confidentiality agreements. But it is important to note that this new law has no impact on non-competes and other restrictive covenants signed before that date. Any contract containing restrictive covenants executed prior to that date will be scrutinized under the old law, which is much more favorable to employees. Therefore, since May 2011, many employers have sought legal assistance to re-draft their non-compete agreements to comply with the new law. And of course, many employees have been seeking legal advice regarding their non-compete agreements under both the old law and new law. The attorneys at Hill, Kertscher & Wharton have more than a decade of experience helping both employers and employees effectively navigate the new and old laws and, where necessary, successfully litigating these disputes in court.

Which employees need to be concerned about the non-compete covenants under Georgia’s non-compete law?

Not all employees can be subjected to the non-competition restrictions after their employment ends. Enforcement of such restrictions is not permitted against an employee unless in the course of his employment, the employee:

  1. Regularly solicited customers or prospective customers for the employer.
  2. Regularly engaged in making sales or obtaining orders or contracts for products or services to be performed by the employer.
  3. Performed duties such as managing the business or department in which the employer is employed, directs the work of other employees, has hiring and firing authority, or can affect the status of other workers
  4. Performed duties of a key employee or professional.

However, it is important to note that early interpretations of this part of the new statute have interpreted it broadly, and in particular the “key employee” provision is being interpreted to cover many categories of employees. Our firm has been involved (for both employees and employers) in litigation that may determine the limits of this “key employee” provision.

How is it determined if a restrictive covenant is reasonable under the new non-compete law?

Under the new law, Georgia courts will continue to consider the time period, geographic territory, and scope of activities restricted to determine whether a restrictive covenant is “reasonable.” The law provides specific guidance for different types of agreements as to what time periods will be considered reasonable. For example, in covenants being enforced against a former employee, a Georgia court will presume that a covenant of 2 years or less is reasonable and more than 2 years is unreasonable. The new guidelines do give the drafter of these new restrictive covenants more guidance, and our firm is actively assisting clients in drafting revised covenants under the new law.

Does a judge have the power to modify a restrictive covenant that would otherwise be unenforceable?

Prior to the new non-compete interpretation, courts in Georgia were not allowed to “blue pencil” or change restrictive covenants to make them enforceable. Perhaps the most significant change with regard to the new law is that courts are now authorized to cure or “blue pencil” non-compete agreements signed on or after May 11, 2011. This new standard is far more forgiving than the rigid all or nothing approach followed previously. The courts are able to re-write an overbroad covenant to narrow its scope to make it reasonable and therefore enforceable. This, of course, can mean that a judge in one Georgia county may re-write the same provision differently than a judge in another Georgia county. So strategically picking the right venue for a lawsuit is a key factor that the lawyers at Hill, Kertscher & Wharton have used to help their clients be successful in these disputes.

If you or your business is in need of an experienced Georgia non-compete attorney, contact the law offices of Hill, Kertscher & Wharton, LLP at (770) 995-0993 or drk@hkw-law.com. We will ensure that your rights are protected so litigation is avoided, or aggressively fight for your position if a case has already started.