How the New State of Georgia Non-Compete Law Affects Employer-Employee Covenants & Work Contracts
Georgia voters on November 2, 2010, overwhelmingly approved an amendment to the state constitution that enables legislation adopted earlier in the year to greatly expand the ability of Georgia employers to restrict employees from taking jobs with competitors. The legislation is codified in O.C.G.A. § 13-8-2.1 and § 13-8-50 to -59.
The most significant change in the law is that Georgia courts are now allowed to redraft or “blue pencil” employment agreements that are challenged as anti-competitive to allow them to be enforced. Previously, if a restriction was written into an employment agreement, other than in connection with the sale of a business, the court would find the entire agreement unenforceable. With the new law, the courts can change the terms of an agreement to make it enforceable.
For example, a restriction on disclosing confidential information, not purely a trade secret, is now permissible for as long as it remains confidential. The new law presumes that a two to three year restriction is enforceable, but other terms are possible. Now, employment agreements also may contain the previously impermissible “springing territory” clause, which allows an undefined geographic restriction to be enforced based on the employee’s last territory. Additionally passive, not active, solicitation of customers from a past employer now can be prohibited. Previously, employees could merely accept business from a former employer’s customers.
The new law will apply to agreements executed after January 1, 2011. Prior agreements remain subject to the current patchwork of case law.
Employment Law Practice
The Morgan Law Firm represents employees and occasionally employers in disputes about non-compete agreements and other workplace issues. Please read more about our Employment Law Legal Services.
