Traditionally, Georgia law regarding noncompete agreements has been very pro-employee. However, in November, 2010, Georgia voters approved a constitutional amendment to change Georgia's noncompete and restrictive covenant law, which, as a result, as become one of the most pro-employer noncompete and restrictive covenant statutes in the United States. However, due to a legislative snafu, the law did not go into effect until the 2011. This new law dramatically alters Georgia's noncompete law. Are you ready for these changes. Some of the most significant changes are as follows:
• To Whom Restrictive Covenant Agreements Apply: Post Employment Restrictive covenants are only permitted for certain employees, namely high level employees, those engaged in soliciting customers or prospective customers, managers meeting certain criteria and professionals as more fully spelled out in the statute.
• Presumptively Reasonable Time Limits: Under prior law, there were no presumptively reasonable time limits for such agreements in the statute. Instead, it was left to the courts to make such a ruling on a case by case basis based on the particular facts and precedent. Now, however, there are presumptively reasonable time limits set forth in the statute. A restrictive covenant is presumed to be reasonable if it is for a period of two years or less and presumed unreasonable if for a period of more than two years. If, however, the restrictive covenant was signed as part of a business sale, then the presumptively reasonable time limit is increased to the longer of five years or the time period in which payments are made to the seller as part of the business sale.
• Blue Pencil: Under prior Georgia law, any agreement prohibiting post-employment competition that was not enforceable as written was void and would render similar provisions in the same agreement void. Now, however, if a court finds that a restrictive covenant or other noncompete agreement fails to comply with the new law, instead of refusing to enforce the agreement, the Court may instead modify it to make the provision both reasonable and enforceable.
• Nondisclosure Agreements Have No Time Limit: Agreements that prohibit employees from disclosing confidential information no longer are required to have a set reasonable time limit. Previously, such agreements were unenforceable unless they contained a reasonable time limit, such as, for example, two years from the date the employees leaves the company.
The end result of this new change in Georgia restrictive covenant law is clear: Unlike in the past, Georgia non-compete agreements, non-solicitation agreements and confidentiality agreements are very likely to be held enforceable if challenged in court. While a court may well modify the agreement if it is found to be unreasonable in certain respects, it nevertheless is very likely to be enforced at least to some degree considered "reasonable" by the court.
Peter G. Golden, The Golden Law Firm, LLC, Atlanta, Georgia, http://www.golden-firm.com
Peter G. Golden is the founding member of the Golden Law Firm, LLC, an Atlanta, Georgia small business law firm specializing in the representation of small businesses in business, employment and Georgia noncompete agreement matters. Please visit http://www.golden-firm.com for more information regarding Georgia noncompete lawyer, protecting your Georgia small business or other small business law advice. Finally, the above writing is not to be construed as legal advice and does not create an attorney-client relationship.
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