Are Non-Compete Agreements Enforceable in Georgia
Are non-compete agreements enforceable in Georgia? Yes, in this state, employers do have the ability to enforce non-compete agreements signed by the employees.3 min read
2. Writing Non-Compete Agreements
Updated June 30, 2020:
Are non-compete agreements enforceable in Georgia? Yes, in this state, employers do have the ability to enforce non-compete agreements signed by their employees. In fact, Georgia has specific rules that make enforcing these agreements easier than in other states.
Changes in Georgia's Non-Compete Laws
In Georgia, the laws related to non-compete agreements have changed multiple times in the last few years. To make it easier for employers to enforce non-compete agreements, state legislators passed a new law. Once the law was in place, Georgia companies began aggressively enforcing their non-compete agreements. Shortly after the law passed, however, the State Supreme Court ruled that the law was in violation of the Georgia Constitution because it inhibited competition.
After this ruling, the Georgia Constitution was amended to allow for enforcement of the new law. Once the amendment passed, the law related to non-compete agreements was once again passed and took effect. Any non-compete agreement signed after May 2011 is enforceable.
The new law is very favorable for businesses in the state, as it makes enforcing non-compete agreements much easier. Prior to the passing of this law, most non-compete agreements were considered void and unenforceable.
The old rule in Georgia was that a non-compete agreement wasn't enforceable if the contract contained any unenforceable terms. The benefit of the new law is that an agreement is not invalid just because it contains an unenforceable term. Instead, the court has the ability to remove these terms while leaving the overall agreement intact. To avoid a lengthy court process, however, businesses should review their non-compete agreements to make sure all the terms are enforceable.
Writing Non-Compete Agreements
If you want to use non-compete agreements for your Georgia business, there are five different factors you should keep in mind.
First, for a non-compete agreement to be valid in Georgia, the contract must contain consideration, which is something of value. If you want one of your current employees to sign one of these agreements, you need to provide them something of value in exchange. The consideration of your agreements is left to your discretion and can change from agreement to agreement.
Second, you should keep in mind the “blue pencil” rule. As mentioned, courts in Georgia are now allowed to modify non-compete agreements instead of throwing them out completely. This is known as the blue pencil rule of severability. Courts can remove unenforceable terms from a non-compete agreement as long as altering the agreement would not make it more restrictive.
Third, you should keep in mind that you can use non-compete agreements for only four groups of employees in Georgia:
- Sales staff.
- Vital employees or company professionals.
- Employees in management positions.
- Employees who regularly solicit business from customers.
If an employee does not fall into one of these specific categories, then the non-compete agreement would not be enforceable after the employee's termination. The new law allows employers to broadly define what types of activities it considers competing.
Employers also have the ability to include what they believe will be their future territory when writing a non-compete agreement. If an employer doesn't have a presence in a geographical location, but plans to expand to the location in the future, they can prevent their former employee from working in this area for the duration of the non-compete agreement.
Georgia's non-compete agreement law also has the provision for the solicitation of former clients. Court rulings have determined that it is possible to prevent former employees from soliciting clients or other employees as long as the former employee had business interactions with these persons. Keeping former employees from soliciting clients with which they've had no previous business relationship is not possible.
The final area to consider when writing a non-compete agreement are the new rules related to non-disclosure provisions. Previously, Georgia law restricted the duration of non-disclosure provisions. If there was no time limit outlined by the provisions, or if the non-disclosure period was too long, courts would not enforce the provision. Under the new law, non-disclosure provisions remain valid as long as the information covered by the agreement continues to be a trade secret or needs to remain confidential for the success of the business.
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