Election Brings BIG Changes to Georgia Law on Non-Compete Agreements
The passage of Constitutional Amendment One by Georgia voters yesterday brings a dramatic shift in favor of employers seeking to enforce non-compete agreements and other post-employment restrictive covenants against their former Georgia employees. But in order to take advantage of the new law, employers must insist that their employees enter into new agreements.
Amendment One enables legislation already passed by the Georgia Legislature, but the new law applies only to contracts entered into after passage of Amendment One. Pre-Amendment law continues to apply to existing agreements.
Under pre-amendment law, employee non-compete agreements which were even slightly overbroad were routinely thrown out completely by Georgia Courts. Under these circumstances, Courts also generally refused to enforce customer non-solicitation provisions, regardless of how well they were drafted. The most important change in the new law is to permit a judge to enforce restrictions to the extent they are reasonable without having to throw out all or part of the agreement that is overbroad.
Because new restrictive covenant agreements are no longer an "all or nothing" proposition, Georgia employers now have much more latitude in drafting such agreements. But they remain shackled by the pre-amendment law if they try to enforce pre-amendment agreements. For Georgia at-will employees, continued employment is all the consideration necessary to support a new restrictive covenant agreement. While employee morale issues in requiring the execution of new agreements merit careful consideration, the legal imperative for Georgia employers is to require execution of new agreements by all employees in sales, management or professional positions.
As anyone dealing with the area of non-competes and other restrictive covenants knows, this area of the law is often complicated and very fact specific to each situation. Thus, consulting with legal counsel is a wise move to prevent unnecessary disputes in the future. In addition, the key features of the new law will be one of the subjects of Troutman Sanders LLP’s annual Labor and Employment Law Seminar being held on November 11, 2010, for which you may still register to attend here or contact events@troutmansanders.com for more information. If you have immediate questions or cannot attend the Seminar, you should call Charlie Hawkins, Evan Pontz, Caroline Anderson, or any of the other lawyers with Troutman Sanders LLP’s Labor & Employment Group.