Georgians Vote to Make Restrictive Covenants Easier to Enforce


On November 2, 2010, Georgia voters overwhelmingly ratified an amendment to the state constitution that drastically alters Georgia law concerning agreements restricting the rights of employees to compete with their present and former employers. Before this vote, the enforceability of such agreements, which include agreements not to compete and not to solicit customers, depended upon their strict compliance with complex rules developed by Georgia courts. These rules generally were hostile to restrictive covenants and often rendered them completely unenforceable. Moreover, the rules almost always precluded courts from “blue penciling” (i.e., modifying) restrictive covenants to be enforceable.

With the ratification of the amendment, the enforceability of future restrictive covenants will be governed by legislation enacted, contingent upon the amendment’s ratification, in April of 2009. The new legislation overturns the hostile and unforgiving rules courts previously applied and adopts a flexible approach to determine the enforceability of restrictive covenants. In so doing, the legislation provides presumptions favoring restrictive covenants that meet certain standards and permits courts to modify agreements to be enforceable when necessary.

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