The Handler Report

Georgia’s new non-compete and non-solicitation laws

Here is a quick overview of the new laws and some tips to help you understand their implications.

On May 11, 2011, Georgia Governor Nathan Deal signed into law a statute that provides a significant revision in the state’s acceptance of restrictive covenants. The new law should make it easier for employers to write non-competition, non-solicitation and related provisions and it gives courts new flexibility in enforcing agreements during litigation. 

Non-compete and non-solicitation agreements are the two most problematic provisions of employment agreements known as restrictive covenants, which also include confidentiality and non-recruitment agreements. Georgia’s new laws give judges new leeway in enforcing non-compete and non-solicitation agreements as well as the power to revise these agreements in court. We interviewed several top employment attorneys and found that when it comes to crafting these agreements less is more. Companies should focus on the specific assets they are trying to protect and then craft their agreements in narrow terms to protect these concerns. This is an excellent time to review your existing restrictive covenant agreements and policies to make sure that they are in line with new laws.

"It’s still a good idea to draft your agreements as conservatively as you can, casting an eye to how judges have ruled in the past. If a non-solicitation provision will protect your business interests without a non-compete provision, then only use a non-solicitation provision..."

Rhonda Klein, Employment Attorney Wimberly, Lawson, Steckel, Schneider, & Stine, P.C.

Even though the new legislation appears to favor employers in litigious situations, companies should realize that sometimes employees are mere pawns in this game. Competing companies are the true adversaries. The protection of proprietary information and trade secrets should be the considered the primary reason that these agreements exist and the reason most cases will wind up in court.

The hiring employers in competitive industries will find it next to impossible to avoid employees who have signed restrictive covenants and this will become truer under the new, easier to enforce law, but this needn’t inhibit hiring as long as the appropriate precautions are being taken to protect the company’s interests. Knowing the law and adopting hiring policies to acknowledge it’s requirements can significantly mitigate the risks associated with hiring.

It may take a few years to realize the full impact of this new legislation. In the meantime, we’ve created an Executive Brief on Restrictive Covenants to share some of our findings.

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OFF THE RECORD

Perkins soon found out his new hires had non-competes with their previous employers.

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