As an employer, you know that departing employees can damage your company by working for a competitor or sharing your trade secrets. Even if they do not mean any harm, your business may still suffer losses as a result.
Fortunately, there are ways of stopping former employees from inflicting various types of damage on your company. By speaking with an Alpharetta restrictive covenants lawyer, you can better understand your options for drafting contracts to protect your business. A skilled attorney at Sparks Law can draft employment agreements or standalone contracts that suit your unique needs.
Restrictive covenants are contract terms that can protect a business in various ways. The four most important types of restrictive covenants are:
A non-compete agreement is a contract between an employer and employee in which the employee gives up the right to work for an employer’s competitor. To be binding, both parties must exchange consideration, an essential part of all contracts.
If an employee signs a non-compete agreement when they are hired, they agree to give up the right to pursue a job with an employer’s competitor in exchange for the job. If the employee is leaving, the employer may offer special payment or a promise to write a glowing recommendation.
A non-compete must be reasonable to be legal. An employer cannot stop an employee from working in the same business across the state or for an indefinite amount of time. Generally, employees will be restricted within a certain number of miles and for several months.
Employers do not want current or former employees discussing their business with others who may take advantage of this confidential information. To prevent this breach in confidentiality, employees are asked to sign non-disclosure agreements, allowing employers to safeguard their:
A non-solicitation clause prevents former employees from stealing their former employer’s clients. Generally, a contract can prevent further contact between a former employee and client if the employee interacted with the customer on behalf of their former employer. Georgia will uphold non-solicitation clauses if the time limit is reasonable (usually two years).
Employees sometimes try to recruit employees from their old company, prompting employers to use non-recruitment documents to prevent this. The Georgia Court of Appeals ruled on these restrictive covenants in 2017 when it overturned a trial court decision in CMGRP, Inc. v. Gallant, No. A17A1168 (Ga. Ct. App. Oct. 4, 2017). The trial court ruled a non-solicitation agreement invalid because it restricted soliciting all employees, not just the ones known to the soliciting employee. The agreement also did not specify a geographic area.
The Appeals Court reversed this decision, allowing employers to completely restrict employee recruitment. It also stated that a geographic restriction is not necessary for enforceable non-solicitation agreements. However, other Georgia Appeals Courts have published different rulings concerning non-solicitation, so an employer should consult a restrictive covenants lawyer in Alpharetta on their specific situation.
Over the years, restrictive covenants have been controversial. Former employees say they can be unreasonably harsh, making it hard to secure new jobs or build clientele when starting their own businesses. In response, Georgia has enacted legislation and court rulings that limit restrictive covenants for a specific time and geographic area.
If a restrictive covenant is too broad, Georgia’s Blue Pencil Rule allows judges to strike or rewrite portions of a contract without voiding the entire document. An attorney in the area can review a contract to ensure that the restrictive covenants are not subject to this legal standard.
As an employer, you know that a good relationship with your relationship can benefit your business. However, employees are not always a good fit, and they sometimes move on to another company. When they leave, you want to ensure that what they say or do does not harm your business.
If you own a business and rely on employees, speak to an Alpharetta restrictive covenants lawyer. The attorneys at Sparks Law can review or draft documents to protect all the hard work you have put into your company. Call us today to learn more.
