Georgia’s New Non-Compete Law

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Traditionally, employers have been able to prohibit their employees from leaving their company and engaging in competition against them. The common tools used to enforce these restrictions are non-compete and non-solicitation agreements. Prior to May 11, 2011, these agreements were analyzed based on Georgia common law and were subject to strict scrutiny by the courts. Rather than recognize the “blue pencil” rule utilized in other states which allows modification of overbroad agreements, Georgia’s common law provided that if an agreement was considered overbroad in any aspect, the agreement was struck down in its entirety and deemed unenforceable. Therefore, even well crafted agreements provided uncertain security for employers seeking to protect their intellectual capital.

That uncertainty changed when Georgia’s new restrictive covenant law took effect on May 11, 2011. The new statutory framework is codified at O.C.G.A. Sec. 13-8-50, et seq. and establishes parameters regarding an employer’s ability to control a former employee’s subsequent employment with a competitor. The most notable change is the recognition of the “blue pencil” rule which gives judges the ability to modify a non-compete agreement. Additionally, the new statutory framework provides employers with the ability to better exercise legal remedies, such as restraining a party from violating the agreement or seeking damages against third parties for conspiring to violate the covenant.

As an employer, and because the updated statute allows modification of existing agreements absent consideration, it is important that you review and re-execute any agreements your company has in place in order to ensure they are covered by the new law. If your company does not have existing non-compete agreements, we emphasize the importance in observing the risks associated with the failure to protect your company’s intellectual capital from competitors.

At Prior, Daniel & Wiltshire, LLC we provide services relating to non-compete security in both drafting and litigation, and are happy to assist you in protecting your company. If you have questions about this, or any other legal matter, please feel free to contact a member of our firm.

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