Likewise,in Kennedy v. The Shave Barber Co. (Ga.App Dec 20, 2018)) a 3 mile territory was upheld as geographically reasonable. Of note was that the ex employee was a low level hairdresser not expected to be covered by the act. The court not only found she was a covered employee, but also found that many of her social media posts constituted customer solicitation.

Finally, in March 2019, the court ruled that a backhoe worker was allowed to join a competing company, in spite of the non-compete he signed. (Court found he was not a "key employee" as defined by the Georgia Restrictive Covenant Act.) See Blair v. Pantera Enters., Inc., 2019 Ga. App. LEXIS 114).

Aside from these cases, we have almost no precedent to go by as of yet. But a few federal rulings from the GA district courts could suggest how the state courts will decide things.

For example, see Lifebrite Labs, LLC v. Cooksey (N.D. Ga. December 2016) where the federal district court would not rewrite the contract to supply a missing geographical term. Instead the court found that "though courts may strike unreasonable restrictions, and may narrow over-broad territorial designations, courts may not completely reform and rewrite contracts by supplying new and material terms from whole cloth.”

See also CSM Bakery Solutions, LLC v. Debus (N.D. Ga. 2017) where the new GA non-compete laws did not apply to an ex-employee who did not spend most or all of their time making sales or managing people.

But see also CMGRP, Inc. v. Gallant, No. A17A1168 (Ga. Ct. App. Oct. 4, 2017) where the Georgia Court of Appeals confirms that a lack of geographic or material contact limitation does not invalidate a non-solicitation of employees covenant. The court in this case distinquished a non recruitment/non solicitation clause from a non-compete. see Non Competes v. Non Solicitation.

So what's the bottom line? No one knows yet. We must wait for more GA cases to appear on the books! See also GA cases on non-competes from 2017 onwards. (note most of these cases still involve the old law, e.g. contracts signed before May 11, 2011). Here are some educated guesses by lawyers on which types of non competes the courts will and won't enforce.


Key Provisions In the New Law Enforcing Non Compete Agreements

Pro Employer Provisions

For More On How The New Laws Change Restrictive Covenants, See

Changes In Georgia Restrictive Covenants Under The New Law

Court Opinions on GA Restrictive Covenants Since May 11, 2011

GA State Bar Journal Non-Compete Cases as of October 2020
Assesses who is a key employee, whether the courts can add terms or just cross out terms in a non-competition agreement.

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Non Compete Statutes In Full

§ 13-8-2.  Contracts contravening public policy generally

Blue= Law For The Employee (Can Be Used Against Employer Asserting The Restrictive Covenant)
Red= Law Against The Employee(Can Be Used Against Employee Contesting The Restrictive Covenant)
Green=Law That Could Go Either Way


   (a) A contract which is against the policy of the law cannot be enforced. Contracts deemed contrary to public policy include but are not limited to:

   (1) Contracts tending to corrupt legislation or the judiciary;

   (2) Contracts in general restraint of trade, as distinguished from contracts in partial restraint of trade as provided for in Code Section 13-8-2.1;

   (3) Contracts to evade or oppose the revenue laws of another country;

   (4) Wagering contracts; or

   (5) Contracts of maintenance or champerty.

(b) A covenant, promise, agreement, or understanding in or in connection with or collateral to a contract or agreement relative to the construction, alteration, repair, or maintenance of a building structure, appurtenances, and appliances, including moving, demolition, and excavating connected therewith, purporting to require that one party to such contract or agreement shall indemnify, hold harmless, insure, or defend the other party to the contract or other named indemnitee, including its, his, or her officers, agents, or employees, against liability or claims for damages, losses, or expenses, including attorney fees, arising out of bodily injury to persons, death, or damage to property caused by or resulting from the sole negligence of the indemnitee, or its, his, or her officers, agents, or employees, is against public policy and void and unenforceable. This subsection shall not affect any obligation under workers' compensation or coverage or insurance specifically relating to workers' compensation, nor shall this subsection apply to any requirement that one party to the contract purchase a project specific insurance policy, including an owner's or contractor's protective insurance, builder's risk insurance, installation coverage, project management protective liability insurance, an owner controlled insurance policy, or a contractor controlled insurance policy.

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§ 13-8-2.1.  Contracts in partial restraint of trade

Blue= Law For The Employee (Can Be Used Against Employer Asserting The Restrictive Covenant)
Red= Law Against The Employee(Can Be Used Against Employee Contesting The Restrictive Covenant)
Green=Law That Could Go Either Way

 

§ 13-8-50. Legislative findings

Blue= Law For The Employee (Can Be Used Against Employer Asserting The Restrictive Covenant)
Red= Law Against The Employee(Can Be Used Against Employee Contesting The Restrictive Covenant)
Green=Law That Could Go Either Way
 

The General Assembly finds that reasonable restrictive covenants contained in employment and commercial contracts serve the legitimate purpose of protecting legitimate business interests and creating an environment that is favorable to attracting commercial enterprises to Georgia and keeping existing businesses within the state. Further, the General Assembly desires to provide statutory guidance so that all parties to such agreements may be certain of the validity and enforceability of such provisions and may know their rights and duties according to such provisions.

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§ 13-8-51.  Definitions

Blue= Law For The Employee (Can Be Used Against Employer Asserting The Restrictive Covenant)
Red= Law Against The Employee(Can Be Used Against Employee Contesting The Restrictive Covenant)
Green=Law That Could Go Either Way
 

 As used in this article, the term:

   (1) "Affiliate" means:

      (A) A person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with another person or entity;

      (B) Any entity of which a person is an officer, director, or partner or holds an equity interest or ownership position that accounts for 25 percent or more of the voting rights or profit interest of such entity;

      (C) Any trust or other estate in which the person or entity has a beneficial interest of 25 percent or more or as to which such person or entity serves as trustee or in a similar fiduciary capacity; or

      (D) The spouse, lineal ancestors, lineal descendants, and siblings of the person, as well as each of their spouses.

   (2) "Business" means any line of trade or business conducted by the seller or employer, as such terms are defined in this Code section.

   (3) "Confidential information" means data and information:

      (A) Relating to the business of the employer, regardless of whether the data or information constitutes a trade secret as that term is defined in Article 1 of Chapter 10 of Title 10;

      (B) Disclosed to the employee or of which the employee became aware of as a consequence of the employee's relationship with the employer;

      (C) Having value to the employer;

      (D) Not generally known to competitors of the employer; and

      (E) Which includes trade secrets, methods of operation, names of customers, price lists, financial information and projections, route books, personnel data, and similar information;
provided, however, that such term shall not mean data or information (A) which has been voluntarily disclosed to the public by the employer, except where such public disclosure has been made by the employee without authorization from the employer; (B) which has been independently developed and disclosed by others; or (C) which has otherwise entered the public domain through lawful means.

   (4) "Controlling interest" means any equity interest or ownership participation held by a person or entity with respect to a business that accounts for 25 percent or more of the voting rights or profit interest of the business prior to the sale, alone or in combination with the interest or participation held by affiliates of such person or entity.

   (5) "Employee" means:

      (A) An executive employee;

      (B) Research and development personnel or other persons or entities of an employer, including, without limitation, independent contractors, in possession of confidential information that is important to the business of the employer;

      (C) Any other person or entity, including an independent contractor, in possession of selective or specialized skills, learning, or abilities or customer contacts, customer information, or confidential information who or that has obtained such skills, learning, abilities, contacts, or information by reason of having worked for an employer; or

      (D) A franchisee, distributor, lessee, licensee, or party to a partnership agreement or a sales agent, broker, or representative in connection with franchise, distributorship, lease, license, or partnership agreements.

Such term shall not include any employee who lacks selective or specialized skills, learning, or abilities or customer contacts, customer information, or confidential information.

   (6) "Employer" means any corporation, partnership, proprietorship, or other business organization, whether for profit or not for profit, including, without limitation, any successor in interest to such an entity, who or that conducts business or any person or entity who or that directly or indirectly owns an equity interest or ownership participation in such an entity accounting for 25 percent or more of the voting rights or profit interest of such entity. Such term also means the buyer or seller of a business organization.

   (7) "Executive employee" means a member of the board of directors, an officer, a key employee, a manager, or a supervisor of an employer.

   (8) "Key employee" means an employee who, by reason of the employer's investment of time, training, money, trust, exposure to the public, or exposure to customers, vendors, or other business relationships during the course of the employee's employment with the employer, has gained a high level of notoriety, fame, reputation, or public persona as the employer's representative or spokesperson or has gained a high level of influence or credibility with the employer's customers, vendors, or other business relationships or is intimately involved in the planning for or direction of the business of the employer or a defined unit of the business of the employer. Such term also means an employee in possession of selective or specialized skills, learning, or abilities or customer contacts or customer information who has obtained such skills, learning, abilities, contacts, or information by reason of having worked for the employer.

   (9) "Legitimate business interest" includes, but is not limited to:

      (A) Trade secrets, as defined by Code Section 10-1-761, et seq.;

      (B) Valuable confidential information that otherwise does not qualify as a trade secret;

      (C) Substantial relationships with specific prospective or existing customers, patients, vendors, or clients;

      (D) Customer, patient, or client good will associated with:

         (i) An ongoing business, commercial, or professional practice, including, but not limited to, by way of trade name, trademark, service mark, or trade dress;

         (ii) A specific geographic location; or

         (iii) A specific marketing or trade area; and

      (E) Extraordinary or specialized training.

   (10) "Material contact" means the contact between an employee and each customer or potential customer:

      (A) With whom or which the employee dealt on behalf of the employer;

      (B) Whose dealings with the employer were coordinated or supervised by the employee;

      (C) About whom the employee obtained confidential information in the ordinary course of business as a result of such employee's association with the employer; or

      (D) Who receives products or services authorized by the employer, the sale or provision of which results or resulted in compensation, commissions, or earnings for the employee within two years prior to the date of the employee's termination.

   (11) "Modification" means the limitation of a restrictive covenant to render it reasonable in light of the circumstances in which it was made. Such term shall include:

      (A) Severing or removing that part of a restrictive covenant that would otherwise make the entire restrictive covenant unenforceable; and

      (B) Enforcing the provisions of a restrictive covenant to the extent that the provisions are reasonable.

   (12) "Modify" means to make, to cause, or otherwise to bring about a modification.

   (13) "Products or services" means anything of commercial value, including, without limitation, goods; personal, real, or intangible property; services; financial products; business opportunities or assistance; or any other object or aspect of business or the conduct thereof.

   (14) "Professional" means an employee who has as a primary duty the performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction or requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor. Such term shall not include employees performing technician work using knowledge acquired through on-the-job and classroom training, rather than by acquiring the knowledge through prolonged academic study, such as might be performed, without limitation, by a mechanic, a manual laborer, or a ministerial employee.

   (15) "Restrictive covenant" means an agreement between two or more parties that exists to protect the first party's or parties' interest in property, confidential information, customer good will, business relationships, employees, or any other economic advantages that the second party has obtained for the benefit of the first party or parties, to which the second party has gained access in the course of his or her relationship with the first party or parties, or which the first party or parties has acquired from the second party or parties as the result of a sale. Such restrictive covenants may exist within or ancillary to contracts between or among employers and employees, distributors and manufacturers, lessors and lessees, partnerships and partners, employers and independent contractors, franchisors and franchisees, and sellers and purchasers of a business or commercial enterprise and any two or more employers. A restrictive covenant shall not include covenants appurtenant to real property.

   (16) "Sale" means any sale or transfer of the good will or substantially all of the assets of a business or any sale or transfer of a controlling interest in a business, whether by sale, exchange, redemption, merger, or otherwise.

   (17) "Seller" means any person or entity, including any successor-in-interest to such an entity, that is:

      (A) An owner of a controlling interest;

      (B) An executive employee of the business who receives, at a minimum, consideration in connection with a sale; or

      (C) An affiliate of a person or entity described in subparagraph (A) of this paragraph; provided, however, that each sale involving a restrictive covenant shall be binding only on the person or entity entering into such covenant, its successors-in-interest, and, if so specified in the covenant, any entity that directly or indirectly through one or more affiliates is controlled by or is under common control of such person or entity.

   (18) "Termination" means the termination of an employee's engagement with an employer, whether with or without cause, upon the initiative of either party.

   (19) "Trade dress" means the distinctive packaging or design of a product that promotes the product and distinguishes it from other products in the marketplace.

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§ 13-8-52.  Application


   (a) The provisions of this article shall be applicable only to contracts and agreements between or among:

   (1) Employers and employees, as such terms are defined in Code Section 13-8-51;

   (2) Distributors and manufacturers;

   (3) Lessors and lessees;

   (4) Partnerships and partners;

   (5) Franchisors and franchisees;

   (6) Sellers and purchasers of a business or commercial enterprise; and

   (7) Two or more employers.

(b) The provisions of this article shall not apply to any contract or agreement not described in subsection (a) of this Code section.

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§ 13-8-53.  Enforcement of covenants; determining competitive status; time geographic limitations

Blue= Law For The Employee (Can Be Used Against Employer Asserting The Restrictive Covenant)
Red= Law Against The Employee(Can Be Used Against Employee Contesting The Restrictive Covenant)
Green=Law That Could Go Either Way


   (a) Notwithstanding any other provision of this chapter, enforcement of contracts that restrict competition during the term of a restrictive covenant, so long as such restrictions are reasonable in time, geographic area, and scope of prohibited activities, shall be permitted. However, enforcement of contracts that restrict competition after the term of employment, as distinguished from a customer nonsolicitation provision, as described in subsection (b) of Code Section 13-8-53, or a nondisclosure of confidential information provision, as described in subsection (e) of Code Section 13-8-53, shall not be permitted against any employee who does not, in the course of his or her employment:

   (1) Customarily and regularly solicit for the employer customers or prospective customers;

   (2) Customarily and regularly engage in making sales or obtaining orders or contracts for products or services to be performed by others;

   (3) Perform the following duties:

      (A) Have a primary duty of managing the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;

      (B) Customarily and regularly direct the work of two or more other employees; and

      (C) Have the authority to hire or fire other employees or have particular weight given to suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees; or

   (4) Perform the duties of a key employee or of a professional.

(b) Notwithstanding any other provision of this chapter, an employee may agree in writing for the benefit of an employer to refrain, for a stated period of time following termination, from soliciting, or attempting to solicit, directly or by assisting others, any business from any of such employer's customers, including actively seeking prospective customers, with whom the employee had material contact during his or her employment for purposes of providing products or services that are competitive with those provided by the employer's business. No express reference to geographic area or the types of products or services considered to be competitive shall be required in order for the restraint to be enforceable. Any reference to a prohibition against 'soliciting or attempting to solicit business from customers' or similar language shall be adequate for such purpose and narrowly construed to apply only to: (1) such of the employer's customers, including actively sought prospective customers, with whom the employee had material contact; and (2) products and services that are competitive with those provided by the employer's business.

(c) (1) Activities, products, or services that are competitive with the activities, products, or services of an employer shall include activities, products, or services that are the same as or similar to the activities, products, or services of the employer. Whenever a description of activities, products, and services, or geographic areas, is required by this Code section, any description that provides fair notice of the maximum reasonable scope of the restraint shall satisfy such requirement, even if the description is generalized or could possibly be stated more narrowly to exclude extraneous matters. In case of a postemployment covenant entered into prior to termination, any good faith estimate of the activities, products, and services, or geographic areas, that may be applicable at the time of termination shall also satisfy such requirement, even if such estimate is capable of including or ultimately proves to include extraneous activities, products, and services, or geographic areas. The postemployment covenant shall be construed ultimately to cover only so much of such estimate as relates to the activities actually conducted, the products and services actually offered, or the geographic areas actually involved within a reasonable period of time prior to termination.

   (2) Activities, products, or services shall be considered sufficiently described if a reference to the activities, products, or services is provided and qualified by the phrase 'of the type conducted, authorized, offered, or provided within two years prior to termination' or similar language containing the same or a lesser time period. The phrase "the territory where the employee is working at the time of termination" or similar language shall be considered sufficient as a description of geographic areas if the person or entity bound by the restraint can reasonably determine the maximum reasonable scope of the restraint at the time of termination.

(d) Any restrictive covenant not in compliance with the provisions of this article is unlawful and is void and unenforceable; provided, however, that a court may modify a covenant that is otherwise void and unenforceable as long as the modification does not render the covenant more restrictive with regard to the employee than as originally drafted by the parties.

(e) Nothing in this article shall be construed to limit the period of time for which a party may agree to maintain information as confidential or as a trade secret, or to limit the geographic area within which such information must be kept confidential or as a trade secret, for so long as the information or material remains confidential or a trade secret, as applicable.

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§ 13-8-54.  Judicial construction of covenants

Blue= Law For The Employee (Can Be Used Against Employer Asserting The Restrictive Covenant)
Red= Law Against The Employee(Can Be Used Against Employee Contesting The Restrictive Covenant)
Green=Law That Could Go Either Way

(a) A court shall construe a restrictive covenant to comport with the reasonable intent and expectations of the parties to the covenant and in favor of providing reasonable protection to all legitimate business interests established by the person seeking enforcement.

(b) In any action concerning enforcement of a restrictive covenant, a court shall not enforce a restrictive covenant unless it is in compliance with the provisions of Code Section 13-8-53; provided, however, that if a court finds that a contractually specified restraint does not comply with the provisions of Code Section 13-8-53, then the court may modify the restraint provision and grant only the relief reasonably necessary to protect such interest or interests and to achieve the original intent of the contracting parties to the extent possible.

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§ 13-8-55.  Requirements of person seeking enforcement of covenants

Blue= Law For The Employee (Can Be Used Against Employer Asserting The Restrictive Covenant)
Red= Law Against The Employee(Can Be Used Against Employee Contesting The Restrictive Covenant)
Green=Law That Could Go Either Way


The person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant. If a person seeking enforcement of the restrictive covenant establishes by prima-facie evidence that the restraint is in compliance with the provisions of Code Section 13-8-53, then any person opposing enforcement has the burden of establishing that the contractually specified restraint does not comply with such requirements or that such covenant is unreasonable.

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§ 13-8-56.  Reasonableness determinations restricting competition; presumptions

Blue= Law For The Employee (Can Be Used Against Employer Asserting The Restrictive Covenant)
Red= Law Against The Employee(Can Be Used Against Employee Contesting The Restrictive Covenant)
Green=Law That Could Go Either Way


In determining the reasonableness of a restrictive covenant that limits or restricts competition during the course of an employment or business relationship, the court shall make the following presumptions:

   (1) A time period equal to or measured by duration of the parties' business or commercial relationship is reasonable;

   (2) A geographic territory which includes the areas in which the employer does business at any time during the parties' commercial relationship, even if not known at the time of entry into the restrictive covenant, is reasonable provided that:

      (A) The total distance encompassed by the provisions of the covenant also is reasonable;

      (B) The agreement contains a list of particular competitors as prohibited employers for a limited period of time after the term of employment or a commercial or business relationship; or

      (C) Both subparagraphs (A) and (B) of this paragraph;

   (3) The scope of competition restricted is measured by the business of the employer or other person or entity in whose favor the restrictive covenant is given; provided, however, that a court shall not refuse to enforce the provisions of a restrictive covenant because the person seeking enforcement establishes evidence that a restrictive covenant has been violated but has not proven that the covenant has been violated as to the entire scope of the prohibited activities of the person seeking enforcement or as to the entire geographic area of the covenant; and

   (4) Any restriction that operates during the term of an employment relationship, agency relationship, independent contractor relationship, partnership, franchise, distributorship, license, ownership of a stake in a business entity, or other ongoing business relationship shall not be considered unreasonable because it lacks any specific limitation upon scope of activity, duration, or geographic area as long as it promotes or protects the purpose or subject matter of the agreement or relationship or deters any potential conflict of interest.

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§ 13-8-57.  Reasonableness determinations restricting time; presumptions

Blue= Law For The Employee (Can Be Used Against Employer Asserting The Restrictive Covenant)
Red= Law Against The Employee(Can Be Used Against Employee Contesting The Restrictive Covenant)
Green=Law That Could Go Either Way


   (a) In determining the reasonableness in time of a restrictive covenant sought to be enforced after a term of employment, a court shall apply the rebuttable presumptions provided in this Code section.

(b) In the case of a restrictive covenant sought to be enforced against a former employee and not associated with the sale or ownership of all or a material part of:

   (1) The assets of a business, professional practice, or other commercial enterprise;

   (2) The shares of a corporation;

   (3) A partnership interest;

   (4) A limited liability company membership; or

   (5) An equity interest or profit participation, of any other type, in a business, professional practice, or other commercial enterprise,

a court shall presume to be reasonable in time any restraint two years or less in duration and shall presume to be unreasonable in time any restraint more than two years in duration, measured from the date of the termination of the business relationship.

(c) In the case of a restrictive covenant sought to be enforced against a current or former distributor, dealer, franchisee, lessee of real or personal property, or licensee of a trademark, trade dress, or service mark and not associated with the sale of all or a part of:

   (1) The assets of a business, professional practice, or other commercial enterprise;

   (2) The shares of a corporation;

   (3) A partnership interest;

   (4) A limited liability company membership; or

   (5) An equity interest or profit participation, of any other type, in a business, professional practice, or other commercial enterprise,

a court shall presume to be reasonable in time any restraint three years or less in duration and shall presume to be unreasonable in time any restraint more than three years in duration, measured from the date of termination of the business relationship.

(d) In the case of a restrictive covenant sought to be enforced against the owner or seller of all or a material part of:

   (1) The assets of a business, professional practice, or other commercial enterprise;

   (2) The shares of a corporation;

   (3) A partnership interest;

   (4) A limited liability company membership; or

   (5) An equity interest or profit participation, of any other type, in a business, professional practice, or other commercial enterprise,

a court shall presume to be reasonable in time any restraint the longer of five years or less in duration or equal to the period of time during which payments are being made to the owner or seller as a result of any sale referred to in this subsection and shall presume to be unreasonable in time any restraint more than the longer of five years in duration or the period of time during which payments are being made to the owner or seller as a result of any sale referred to in this subsection, measured from the date of termination or disposition of such interest.

For More On How The New Laws Changes Restrictive Covenants, See

Changes In Georgia Restrictive Covenants Under The New Law

Georgia's New Restrictive Covenant Act (Morris, Manning & Martin)

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§ 13-8-58.  Enforcement by third parties

Blue= Law For The Employee (Can Be Used Against Employer Asserting The Restrictive Covenant)
Red= Law Against The Employee(Can Be Used Against Employee Contesting The Restrictive Covenant)
Green=Law That Could Go Either Way
 

(a) A court shall not refuse to enforce a restrictive covenant on the ground that the person seeking enforcement is a third-party beneficiary of such contract or is an assignee or successor to a party to such contract.

(b) In determining the enforceability of a restrictive covenant, it is not a defense that the person seeking enforcement no longer continues in business in the scope of the prohibited activities that is the subject of the action to enforce the restrictive covenant if such discontinuance of business is the result of a violation of the restriction.

(c) A court shall enforce a restrictive covenant by any appropriate and effective remedy available at law or equity, including, but not limited to, temporary and permanent injunctions.

(d) In determining the reasonableness of a restrictive covenant between an employer and an employee, as such terms are defined in subparagraphs (A) through (C) of paragraph (5) of Code Section 13-8-51, a court may consider the economic hardship imposed upon an employee by enforcement of the covenant; provided, however, that this subsection shall not apply to contracts or agreements between or among those persons or entities listed in paragraphs (2) through (7) of subsection (a) of Code Section 13-8-52.

 

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If Your Previously Signed A Non-Compete, You May Still Be Protected Under Prior Law If:

You entered into a non-compete agreement before May 11, 2011. In that case, the old law still controls.

See below excerpt from noncompetereport.com for details on why old law applies up until May 2011.

http://www.noncompetereport.com/2013/04/25/the-georgia-restrictive-covenants-act-two-years-later/

Next, in Becham v. Sythes USA, 482 Fed. Appx. 387 (11th Cir. June 4, 2012), the Eleventh Circuit Court of Appeals cleared up some confusion and held that the first version of Georgia’s new non-compete law, which was passed in 2009 and ratified by voters in 2010 during the general election, was unconstitutional. As a result, the second version of the law, which went into effect on May 11, 2011, is controlling.  Only restrictive covenants signed on or after that date are governed by the new law.

Finally,  in Cone v. Marietta Recycling Corporation (Fulton County Superior Court, Civil Action No. 2012-CV-223811, March 26, 2013), a former employee had signed certain restrictive covenants before Georgia’s new law went into effect, which would mean the old law applied. The former employee, however, also signed a severance agreement after the new law became effective. The severance agreement stated that it superseded all prior agreements, except for the restrictive covenants which would remain in effect.  The former employer argued that this language in the severance agreement brought the covenants under the new law.  In a March 26, 2013 Order, Judge Alford Demsey disagreed. He held, “there is only one way [Marietta Recycling] could have taken advantage of the May 11, 2011 change in Georgia’s law to secure enforceable restrictive covenants against Cone [the former employee] – requiring Cone to execute on or after May 11, 2011, a new contract with new restrictive covenants having a new effective date.” As a result, the old law applied

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Non Compete Agreements (Old Law That Controls Agreements Signed Prior To May 11, 2011)

In Georgia prior to May 11, 2011, most non-competes are found to be void for being way overbroad. In fact, the invalidity of just one provision renders the entire non-compete agreement unenforceable. 

However, the threat of a non-compete has a tremendous deterrent effect against potential employers, who may fear hiring on another lawsuit.

The cases below explain what makes a non-compete valid or invalid.  Note, under Georgia's Blue Pencil Rule, if one provision is void, the whole contract is void. So, if your ex-employer is enforcing a non-compete that is obviously void, you may be able to file for sanctions against their attorney for a frivolous/bad faith lawsuit. This may get them to think twice before trying these bully tactics on others.

Valid Non-compete Agreements

Reardigan v. Shaw Indus., Inc., Ga. App. , Case No. A99A0394 (5/18/99). In determining the legality of a restrictive covenant (not to compete) a court considers the nature and extent of the business, the situation of the parties, and all other relevant circumstances. The specific test applied to determine the reasonableness of restrictions involves a three element test of

1) duration

2) territorial coverage, and

3) scope of prohibited activity. See, W. R. Grace & Co. v. Mouyal, 262 Ga. 464(1), 422 S.E.2d 529 (1992); and Sysco Food Svcs. v. Chupp, 225 Ga. App. 584, 585(1), 484 S.E. 2d 323 (1997).

Territorial  restrictions related to the territory in which the employee was previously employed, as opposed to the territory in which the former employer does business, will typically be enforced. In this case, the statistical  metropolitan Atlanta area, which includes eighteen (18) counties, was deemed reasonable. Likewise, a restrictive covenant, which limits the employees' competition to circumstances wherein his new  responsibilities and duties are substantially similar to those performed for the former employer, will more  often than not be enforced. See Instrument Repair Service Inc. v. Gunby, ____ Ga. App. ____, Case No. A99A0388 (5/18/99).

For Agreements Entered After 11/3/10 or 1/11/11, This is old law that AS OF NOVEMBER 3, 2010 IS MOSTLY VOID.

Making Plans To compete While Still Employed
An employee breaches no fiduciary duty to an employer simply by making plans to enter a competing business  while he is still employed. The employee is not, however, entitled to solicit customers for a rival business  before the end of his employment nor can he do other similar acts in direct competition with his employer's business. In this case, an injunction was sought after two corporate officers made plans to form a  competing business. The injunction was denied after the court established factually that neither former employee had undertaken to solicit any of the former employer's customers while still employed. No sort of restrictive covenant was involved in this particular case.

I. GENERAL CONSIDERATIONS FOR NON-COMPETE

                            AGREEMENTS

                            A. Public Policy Concerns

 Under the Georgia Constitution, a contract in general restraint of trade or which defeats or lessens competition is void as against public policy. Ga. Const. art. III,  VI, para. V(c).

 In the employment context, a restrictive covenant is only considered in partial restraint of trade. As a result, Georgia courts will enforce a non-compete agreement only if its restrictions involve nothing more than is reasonably necessary to protect an employer's legitimate business interests, and if the agreement reasonably  and specifically defines limitations with respect to duration, activity, and territory. See W.R. Grace & Co. v. Mouyal, 262 Ga. 464, 422 S.E.2d 529 (1992); Farmer v. Airco, Inc., 231 Ga. 847, 204 S.E.2d 580, 581 (1974).

OLD LAW THAT AS OF NOVEMBER 3, 2010 IS MOSTLY VOID.

                            B. The Blue Pencil Doctrine

 In most cases, a non-compete agreement will contain several restrictive covenants, for example, non-compete and non-solicitation clauses. Under the "blue pencil" doctrine, if a court finds that part of a non-compete agreement is unenforceable, it will rewrite the agreement to exclude the unreasonable and unenforceable portions and will then enforce the remaining provisions of the agreement. Georgia courts, however, refuse to  "blue pencil" or rewrite a non-compete agreement. See American General Life & Accident Ins. Co. v. Fisher, 208 Ga. App. 282, 430 S.E.2d 166 (1993); Jarrett v. Hamilton, 179 Ga. App. 422, 346 S.E.2d 875 (1986).

As a result, from the employer's perspective, it is critical that all restrictive covenants in a non-compete  agreement are valid and enforceable because the invalidity of one provision renders the entire non-compete agreement unenforceable. 

The presence, however, of unenforceable non-competition and non-solicitation covenants does not require invalidation of clauses that require the return of documents, nondisclosure clauses, and those provisions which prohibit a former employee from luring away the employees of the former employer to a competing   business. Georgia courts will analyze these clauses separately from those clauses concerning employment and customer solicitation. Sunstates Refrigerated Servs., Inc. v. Griffin, 215 Ga. App. 61, 449 S.E.2d 858, 860 (1994); Wiley v. Royal Cup, Inc.,258 Ga. 357, 360, 370 S.E.2d 744 (1988); Lane Co. v. Taylor, 174 Ga. App. 356,  330 S.E.2d 112 (1985).

OLD LAW THAT AS OF NOVEMBER 3, 2010 IS MOSTLY VOID.

                             III. ENFORCEABILITY ISSUES

                             A. Consideration

A non-compete or nondisclosure agreement must be supported by consideration to  be enforceable. The signing of a covenant not to compete at the inception of an  employment relationship is sufficient consideration to support the agreement. If the agreement is not entered into until after the employment relationship has begun, the employee's continued employment also provides sufficient consideration for the covenant not to compete. See Mouldings, Inc. v. Potter, 315 F. Supp. 704 (M.D. Ga. 1970); Thomas v. Coastal Indus. Servs., Inc., 214 Ga. 832, 108 S.E.2d 328  (1959).

                             B. Duration Of The Restriction

 There are no time restrictions that are deemed by the courts to be unreasonable per se. Limitations of one year and greater have been held to be reasonable. Pittman v. Harbin Clinic Prof'l Ass'n, 210 Ga. App. 767, 437 S.E.2d 619, 621-22 (1993) (citing Rash v. Toccoa Clinic Med. Assocs., 253 Ga. 322, 320 S.E.2d 170 (1984) and Carroll v. Harris, 243 Ga. 34, 252 S.E.2d 461 (1979).

  In Pittman v. Harbin Clinic, the Georgia Court of Appeals found that a one year restriction was patently  reasonable. Generally, however, Georgia courts allow a duration of one to two years before seriously questioning whether a time restriction is reasonable.

                            C. Scope Of Activity

 A restrictive covenant must specifically set forth the nature of the business activities in which the employee is forbidden to engage. The scope of the employee's activity is an essential term to the agreement and the failure to specifically describe the proscription in the agreement will render it unenforceable. For example, fatal to restrictive covenants are terms that include prohibitions against engaging in all duties or  responsibilities which the former employee performed for the employer. See American Gen. Life & Accident Ins. Co. v. Fisher, 208 Ga. App. 282, 430 S.E.2d 166, 168 (1993); Arnall Ins. Agency, Inc. v. Arnall, 196 Ga. App. 414, 396, S.E.2d 257 (1990).

 To be enforceable, the restriction on the employee's activities must bear a reasonable relation to the activities the employee conducted during his/her employment. Thus, an agreement which generally only precludes an employee from later working in the same or similar capacity in which he/she worked for the employer would likely be a reasonable restriction on that employee's activity.

 The restrictive covenant also should not be overly broad as to the activities proscribed. For example, Georgia courts generally will not enforce a covenant that attempts to restrict the former employee from engaging in any business similar to the employer's business or in such broad terms as "in any capacity" for a competitor.

 These restrictions are usually larger than necessary to protect the employer's business interests. See American Gen. Life & Accident Ins. Co. v. Fisher, 208 Ga. App. 282, 430 S.E.2d 166, 168 (1993); National Settlement Assocs. of Ga., Inc. v. Creel, 256 Ga. 329, 349 S.E.2d 177 (1986); McNeal Group, Inc. v. Restivo, 252 Ga. 112, 311 S.E.2d 831 (1984); Ponders, Inc. v. Norman, 246 Ga. 647, 272 S.E.2d 345 (1980).

Likewise, a customer non-solicitation clause should be limited in scope to those customers with whom the employee had contact during employment. See W.R. Grace & Co. v. Mouyal, 262 Ga. 464, 422 S.E.2d 529, 532-33 (1992); Windsor-Douglas Assocs., Inc. v. Patterson, 179 Ga. App. 674, 347 S.E.2d 362 (1986); Nunn v. Orkin Exterminating Co., Inc., 256 Ga. 558, 559, 350 S.E.2d 425 (1986).

OLD LAW THAT AS OF NOVEMBER 3, 2010 IS MOSTLY VOID.

                             D. Territorial Restriction

 In most circumstances, non-compete agreements must include a territorial restriction.  A territorial restriction expressed in geographic terms is necessary to give the employee notice of what constitutes a violation of the agreement. Whether the proscribed territory is reasonable depends not so much on the geographic size of the territory but on whether the restriction is reasonable based on the nature of that employer's business and the circumstances surrounding the case. The courts will also consider the employee's right and ability to earn a living under the terms of the  agreement.

In general, the terms of a territorial limitation must be sufficiently defined to give meaningful definition to the restriction and should not encompass any area greater than that which is necessary to protect the employer's legitimate business interests. E.g., Rollins Protective Servs. Co. v. Palermo, 249 Ga. 138, 140, 287 S.E.2d 546, 548-49 (1982) (a 50-mile restrictive radius of Atlanta was broader than necessary because the employee did not work throughout the entire territory).

In some cases, Georgia courts will allow a customer restriction to substitute for, or complement, a geographic restriction. For example, in W.R. Grace & Co. v. Mouyal, 262 Ga. 464, 422 S.E.2d 529, 532-33 (1992), the Georgia Supreme Court enforced a non-solicitation clause against a former employee that did not contain an express geographic limitation. In that case, the restrictive covenant described a limited number of the employer's patients to which the non-solicitation clause applied. The clause specifically prohibited the former employee dentist from soliciting patients who had been seen at the employer's office during the employee's tenure. In reaching its decision, the court explained as follows:

 As the group which the employer wishes to protect from solicitation becomes more narrowly defined, the need for a territorial restriction expressed in geographic terms becomes less important . . . Requiring an express geographic territorial description in all cases is not in keeping with the reality of the modern business world in which an employee's 'territory' knows no geographic bounds, as the technology of today permits an employee to service clients located throughout the countryand world. Id.; see also Hart v. Marion A. Allen, Inc. of Ga., 211 Ga. App. 431, 440 S.E.2d 26, 27 (1993) (restrictive covenant barring solicitation of and sales to former employer's customers at time of employment termination was not required to contain a specific geographic term to provide "adequate notice as to the scope" of the agreement).

OLD LAW THAT AS OF NOVEMBER 3, 2010 IS MOSTLY VOID.

                             IV. CONCLUSION

If properly drafted, non-compete agreements can protect a company's business interests once its employees terminate their employment. To ensure the enforceability of their non-compete agreements, employers must draft restrictive clauses that are reasonable under the law.

The agreement must be supported by consideration and must include all essential terms. Companies also should be mindful of Georgia's strong public policy against restraints on trade and draft an agreement which is sufficiently narrow. In drafting the agreement, an employer should carefully delineate the business interests it seeks to protect and consider whether the restriction is fair to the employee and his/her ability to earn a living if the agreement is enforced.                  

OLD LAW THAT AS OF NOVEMBER 3, 2010 IS MOSTLY VOID.

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