The short answer is yes, and that’s a relatively new development. Georgia used to have laws that made it difficult to enforce non-compete agreements. However, in recent years, the Georgia legislature has done an about-face and enacted laws that support the enforcement of non-compete agreements in the state, which are much more amenable to businesses. Here’s what you need to know.
What Were Georgia’s Previous Non-Compete Agreement Laws?
Before the recent changes, Georgia’s law had as its foundation the idea that non-compete agreements could violate the Georgia Constitution if too restrictive and not narrowly tailored because they restrained competition. That meant that non-compete agreements were often held not valid by Georgia courts. But the Georgia Constitution was recently amended, and now the laws are much more business-friendly.
What Has Changed in Georgia’s New Non-Compete Agreement Laws?
As long as the non-compete isn’t deemed overly broad (restricting employment in the same field over a wide geographic range or for too long a time), non-competes are now enforceable and not likely to be voided.
That means that companies that have used time and resources to train employees can reasonably expect those employees not to leave the job for the direct competitor across town or even start their own company as competition. If they do, and they’d signed the non-compete agreement, businesses can take action.
The new laws allow businesses to do the following with non-compete agreements that were signed after May 2011:
- Prevent an employee from leaving to work for a business that’s direct competition.
- Prevent an employee from sharing your business information, including customer lists, strategies, or trade secrets, with the competition.
- Prevent an employee from setting up a business that would be direct competition.
- Allow the original employer to sue the former employee for lost revenue if they should start their own business and make money competing with the original employer.
- Apply all the above restrictions to independent 1099 contractors.
What Do I Need to Know about Georgia’s Non-Compete Agreement Laws?
Keep in mind that non-compete agreements are legal documents and should be drawn up by an experienced lawyer. Just because the law was amended doesn’t mean that anything and everything can be put into a non-compete and have it hold up in court. It also doesn’t apply to every type of employee. In Georgia, the only employees (and contractors) who can legally be held to a non-compete are sales staff, management level staff, employees who regularly reach out to customers for business, and any critically important staff member.
Besides defining who can be asked to sign a non-compete, there are other requirements for these agreements in Georgia.
- The employee signing the non-compete must be provided something of value in exchange. What that is varies from company to company, and it can be different for different employees in the company. This might include a cash payment or even a threat of termination if the non-compete is not executed.
- If a company has existing non-competes that have items that aren’t considered enforceable, the company has the option of “blue penciling” them rather than having to start them from scratch. The courts will accept the amended agreements as long as they’re not more restrictive than the original version.
- If a company wants to protect trade secrets or other critical information, they can have that in the non-compete without an expiration date as long as the secret information is still of vital importance to the company as time goes on.
- Present and future business transactions play varied roles. If a company thinks it will expand geographically in the reasonable future, it can put that geography in as part of the non-compete. They can also restrict employees from trying to do business with the company’s existing customers if the employee moves out of the company. But the company can’t prevent the employee from trying to do business with customers that the company has no meaningful business relationship with.
When Can a Business Go After a Former Employee for Violating a Non-Compete Agreement?
If an employee signed a non-compete agreement that met the above criteria, including the employee receiving something of value for the non-compete, there are several steps.
The employer can sue the employee. This involves going to court to ask for an injunction, which is essentially a restraining order to keep the employee from violating the agreement. Unlike some court proceedings that can move slowly, the courts understand that non-compete violations can cause the original employer harm quickly, so these tend to move at a faster pace.
There’s a hearing at which the court decides if they will stop the employee from moving forward on a temporary basis. If the court decides on this temporary decision, it’s only to give both sides more time to prepare for a full trial at a later date.
If the court eventually agrees to the injunction, the employee can no longer continue working for their new employer or at their startup company until the court determines if the non-compete is actually legally enforceable. This is a process that could last for months or years, which is not ideal for the employee.
The courts can also determine if there are any damages due from the employee to the original employer. Sometimes those damages are spelled out in the actual non-compete agreement, but other times it depends on lost income because of the employee leaving for the competition.
What Should My Company Do Regarding Non-Compete Agreements?
Call us at 770-285-7785 to request a free strategy session. Our attorneys have extensive experience working with non-compete agreement enforcement and litigation and understand that your business is valuable to you, and you want to do all you can to protect it. They can review existing non-compete agreements you may have to make sure they’re current with the newest Georgia laws, or they can help you draw up new non-competes based on the current standards. We can also advise what to do if an employee violated their non-compete in any way, whether negotiating with the employee or moving into court proceedings.