Georgia’s New Non-Compete Statute – What a Long Strange Trip It’s Been

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On May 11, 2011, Georgia Governor Nathan Deal signed House Bill 30, Georgia’s new restrictive covenants statute. The signing by Governor Deal brings to a close a process that is accurately summarized by the words of the Grateful Dead – “what a long strange trip it’s been!”

The upshot of the new legislation is that a new day has dawned in Georgia for restrictive covenants signed on or after May 11, 2011. The new law has no impact on non-competes and other restrictive covenants signed before May 11, 2011 (with a caveat – there is an argument that the first go around at the legislation would apply to agreements signed on or after January 2, 2011, but that very debatable issue is explained below).

The new statutory framework is found in O.C.G.A. Section 13-8-50. While there are numerous benefits to the statute, the most notable is that Georgia judges now have the ability to modify non-compete and other restrictive covenant provisions if they are overbroad as written. Under the common law (which still governs covenants signed prior to the effective date of the new legislation), Georgia judges did not have any meaningful wiggle room when asked to enforce a restrictive covenant in the employment context. In other words, if a non-compete or non-solicit provision was overbroad in any respect, it was simply not enforced.

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