Rogers Towers: New Georgia Non-Compete Statute is Better for Employers, But Falls Short of the Protection Afforded Under Florida Law

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The law on non-compete agreements varies, often significantly, from state to state. Florida is arguably the most pro-enforcement state in the country. In Florida, employees generally can be restrained from competing in territories they worked for a period of two years following their employment. Until recently, Georgia was one of the most difficult states in which to enforce a non-compete. The slightest drafting error would have rendered the entire agreement null and void. In November of 2010, new Georgia legislation (House Bill 173) was enacted, making Georgia non-competes easier to enforce and bringing Georgia closer in line with Florida.  However, key distinctions exist. For example:

Florida courts cannot refuse to enforce non-compete agreements on the grounds that they are overbroad.  Where legitimate business interests exist in supporting enforcement, courts are required to modify the agreements to make them reasonable (e.g., reducing a 50 mile geographic restriction to 25 miles). Georgia’s new law permits modification, but solely at the court’s discretion.

Florida law prohibits courts from considering economic hardship on employees in deciding whether to enforce a non-compete. Georgia law does not, allowing employees to argue that they cannot earn a proper living without competing.

Under Florida law, non-solicitation clauses may prohibit employees from both soliciting and accepting business from former clients. Georgia non-solicitation clauses may prohibit only solicitation, meaning that protection is likely lost where the client approaches the former employee

Florida’s non-compete statute has been interpreted numerous times since its enactment in 1996, making it more predictable. Georgia courts have not yet interpreted the new law. Given the discretion granted to Georgia courts, inconsistent results can be expected, particularly during the next few years.

The Georgia law is not retroactive. Employers must enter new agreements with employees to take advantage of the new statute. Unfortunately, the effective date of the legislation has been called into question. Thus, employers should wait until January of 2011 before rolling out agreements. While the Georgia statute falls short of the protections afforded under Florida law, it offers employers greater protection than previously available.

 

Published In: Civil Remedies Updates, General Business Updates, Conflict of Laws Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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