By virtue of a constitutional amendment which passed in November, legislation went into effect on January 1, 2011, that changes Georgia law regarding covenants not to compete in employment contracts.
The previous law, which applies to contracts executed before January 1 of this year is very strict regarding permissible language. Also under pre-January 1 law, if any of the language is deemed too broad under existing case law, then all non-compete provisions in the contract are invalid as well.
Advantages for employers under the new law include the following:
- Upon cessation of employment, an employee can be prohibited for two years from accepting as well as soliciting business from former customers with whom the employee had contact.
- For provisions which restrict areas where a former employee can compete, language now can be drafted to include new areas where the employee actually worked that were not anticipated at the time the employment contract was first signed.
- Confidential and trade secret information can be protected for longer periods of time.
- If an error is made in drafting non-competition provisions, the courts will no longer invalidate them all, but are empowered to remold the language to what a court deems is reasonable to protect the legitimate interests of the employer.
- Safe harbor language is stated in the legislation that can be used in the non-compete agreements.
If a business wishes to take advantage of these new provisions, it will require new agreements with employees after January 1, 2011. If your company would like to discuss the wisdom of having new agreements, or seek legal assistance in preparing such agreements, we would be delighted to be of assistance. You can contact any of the following: Pat Rice, David Hudson, or Jim Ellington, at 706-722-4481, or by email at PRice@hullbarret.com; DHudson@hullbarrett.com; JEllington@hullbarrett.com; or TCathey@hullbarrett.com.