Confusion Abounds Over Effective Date of New Noncompete Law

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As reported in our previous November 3 alert, on November 2, 2010, Georgia voters approved Amendment 1 to the Georgia Constitution, which will, among other things, allow Georgia courts to modify (“blue-pencil”) restrictive covenants which are construed as overly broad so as to make them enforceable. Prior to the election, Georgia lawmakers sponsoring the Amendment confidently proclaimed that it would have “immediate effect” if approved in the election. However, in the short time since the election, a new debate has surfaced regarding the “true” effective date of the Amendment.

A literal reading of the House Bill setting forth the new noncompete law supports the understanding that it became effective on November 3, 2010. However, the House Resolution proposing the Amendment which was adopted during the 2010 session of the Georgia General Assembly was silent on this issue.

The Georgia Constitution provides that amendments become effective on January 1 of the following year “unless the enabling legislation says otherwise.” In this case, because “the enabling legislation” (i.e., the House Resolution) did not “say otherwise,” the argument is being made that the new non-compete law will not become effective until January 1, 2011. Thus, employers may wish to err on the side of caution and assume that the Amendment (and thereby the new non-compete law) will not become effective prior to this date.

Please see full alert below for more information.

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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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