Non Compete Georgia: Everything You Need To Know
Non compete Georgia refers to the state laws that govern non-compete agreements.3 min read
2. Covenant Requirements
3. Amendment to Georgia Non-Compete Laws
4. Who Can Be Required to Sign a Non-Compete Agreement?
Non compete Georgia refers to the state laws that govern non-compete agreements. This type of agreement is typically used to prevent a former employee from working for a competitor or starting his or her own business in the same industry. An individual could breach a non-compete agreement even if he or she does not take any customers from his or her former employer. This protects the time and money the business invests in its employees.
Restrictive covenants are the four common provisions included in a Georgia non-compete agreement:
- Non-compete provision
- Non-solicitation of customers protects the time and money spent building customer relationships and keeps the employee who is leaving from soliciting customers for his or her new business.
- Confidentiality and non-disclosure keep a former employee from revealing trade secrets or other proprietary information.
- Non-solicitation of employees, also called anti-raiding or no-hire provisions, prevent an employee who is leaving for a competitor to encourage other employees to do the same.
Georgia courts will distinguish between these provisions when hearing a case involving a non-compete agreement. For example, a non-solicitation provision does not necessarily keep a former employee from leaving to work for a competitor provided he or she doesn't poach the former employer's customers.
The court will examine scope of prohibited activity, geographic coverage, and length of time to determine whether the restrictive covenants of the agreement are reasonable.
The court requires that a non-compete covenant must protect business interests while remaining reasonable. In general, to be legally enforced a covenant must meet these three requirements.
- Consideration, which means that the employee receives something of value in exchange for agreeing to the contract terms. This could be the job itself, a salary increase, or some other benefit. The promise of keeping one's job is not sufficient consideration, so employers must be careful when requiring current employees to sign a non-compete.
- The agreement must be specific in protecting proprietary information, trade secrets, or another actual business interest.
- The agreement must be reasonable in scope, geography, and duration.
Amendment to Georgia Non-Compete Laws
A 2010 amendment substantially changed the non-compete laws in Georgia and applies to agreements made since May 11, 2011. The new laws tend to favor the interests of the employer rather than those of the employee.
The new law provides more flexibility to employers when determining the extent of restricted territory. It also clarifies two years or less as a reasonable time constraint and considers longer non-compete agreements to be unreasonable.
While the old law required a narrow scope of prohibited activity, under the new law employers can restrict any "good faith estimate" of activities and geographic locations.
The court can also now modify, or "blue-pencil," covenants that are too restrictive under the guidelines above. The modification should realize the agreement's original intent while protecting each party's interests. This new law makes it much easier for employers to enforce restrictive covenants in court, though some agreements are still deemed invalid.
However, it's not clear whether courts are allowed simply to strike overly restrictive covenants or whether they can also add new provisions in place.
Under both the old and new laws, an employee can be fired for refusing to sign a non-compete agreement. That's because Georgia is an at-will employment state.
Who Can Be Required to Sign a Non-Compete Agreement?
Georgia's non-compete amendment is unclear about which employees can be required to sign a non-compete. A 2017 case, CSM Bakery Solutions vs. Debus, involved an employee whose non-compete agreement was dissolved by the court because of her job category. The court found that:
- The defendant did not act in a sales capacity at CSM.
- No sales records or commission sheets were on file for Debus, so no evidence existed that she made sales, solicited customers, or otherwise acted as a salesperson.
- The agreement was too broad because it would apply to anyone who positively affected sales for a company regardless of their specific job duties.
- Debus could not be defined as a "key employee" at this global corporation since her job was relatively low-level among the thousands of employees in several international locations.
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