The short answer is: YES! Typically, non-compete agreements work in Georgia if they’re limited geographically (to about a 10-mile radius) and in time (2 years or less), but there’s a great deal of variance and nuance when it comes to whether yours, specifically, will work for (or against) you.
A non-compete agreement (aka “Covenant to Not Compete” or “CNC”) is a contract between companies and their agents (usually their employees) that restricts the agent from becoming a competitor of the company/employer.
CNCs are usually signed as a part of the employee’s initial employment agreement, and are usually used for employees who are higher-level employees, such as C-level workers, “key employees,” or part of the company’s sales team.
For the most part, Covenants to Not Compete have to be limited in time and scope, depending on the state in which they are created. In Georgia, an agreement that keeps a key employee from working for a competitor anywhere in Georgia for 2 years after their employment ends is probably enforceable against the ex-employee, if that employee worked on a W2 basis, was full time with the company, and the geographic restriction is around a 10 mile radius (i.e., not the entire state of Georgia).
During the tail end of the Biden Administration, the Federal Government Agency, FCC, released a rule, effectively, that would ban nearly all non-compete agreements in the United States. This was set to take effect months after it was issued; however, when the deadline approached, various companies sued to pause the rule’s enforcement while the courts figured out whether the Federal Agency had the authority to overcome other laws in this way. Currently, the rule is still paused, and we have no new guidance on it.
As you might have anticipated, the FCC’s rule brings up Constitutional Law concerns. On the one hand, we have Georgia the State, that amended its State Constitution to allow for non-compete agreements. A State’s Constitution is the highest level of Laws in that State. To contrast that, on the other side, we have a rule made by a Federal Agency that works for Congress. Importantly, this Agency is not actually Congress (Congress did not make and pass a law that bans non-competes across the United States). Congress made a law that allowed for the creation of a Federal Agency, the FCC, that works under Congress. That makes the FCC’s rules (laws) a lower level tier than a statute passed by Congress.
The United States Constitution still grants some law-making power to the States, so it’s a big legal question whether a Federal Agency’s rule could overcome a State Constitutional law (like the one in Georgia).
Sadly, we don’t get to see that battle fought out anytime soon, since it appears that the FCC rule will just be paused indefinitely.
To my knowledge, Trump has not spoken on the FCC rule, but DOGE and other efforts have greatly reduced the FCC’s staff force, power, and authority from before. Further, the effort to ban non-competes was an important issue for the Biden Administration, and it does not appear that the Trump Administration has the same view on this issue.
Oftentimes, the answer is Yes! While Non-Compete Agreements are often “enforceable” in the State of Georgia, the act of actually “enforcing” them takes a lot of time and money, and can be a PR concern for companies as well.
If we play this out, a company would have to have a signed agreement with a non-compete agreement in it, that contract would have to be written perfectly by a lawyer (downloadable online non-competes are usually not enforceable because they do not conform to that unique situation), the employee would have had to have been a full time W2 employee, the non-compete would have to fit within the scope that Georgia allows (typically a 10 mile radius and up to 2 years), the contract would have to use Georgia laws (not CA or another state that does not allow non-competes), the company would have to hire a lawyer to draft and file the lawsuit (probably $10,000 to start), and then go all the way through trial (or settle the dispute earlier), and of course the employee would have to be actually competing against the employer, in violation of the agreement. That’s a lot of “ifs” that have to be present.
There’s also the public relations (PR) piece. Sometimes, filing a lawsuit against employees makes for bad blood with current employees–it could lower morale of their current workforce, especially if the ex-employee is still friends with current workers.
The laws are constantly in flux; the only constant is change! Thankfully, you’ve got a great team at Sparks Law that is always up to date on the changes and can help you ride the wave to success! Give us a call if you have questions about restrictive covenants, or any business legal questions for that matter–we’d love the opportunity to work with you!
Jonathan Sparks helps small to medium-sized companies with their legal issues, general counsel, and registered agent services.
