Your business is uniquely dependent on strategic information, loyal customers, trade secrets, and specific technology. Many of your employees are highly skilled, which contributes to your success. You do not want employees who leave your company to use your sensitive information or the skills they sharpened under your employment if they take a job with a competitor.
You can protect your company’s vital information, customers, and other secrets with restrictive covenants. A skilled attorney at Sparks Law can help draft a non-competition clause that stops a former employee from working for a competitor. For legal advice on restrictive covenants, contact an Alpharetta non-compete agreement lawyer at our firm.
When new employees will have access to confidential information, clients, and company operations, employers typically ask them to sign non-compete agreements. These contracts limit who employees can work for in a specific geographic area after leaving their current job.
A contract requires consideration by both parties, so the employer and employee must give up something of value to receive something else of value from the other party. By signing a non-compete agreement, the employee gives up the right to work for some employers but gains a new job. The employer gives up money as wages to gain a valuable employee who will not compete with the company. A local employment attorney could make sure a company’s non-compete agreements contain suitable consideration to be valid.
Historically, employees have complained that non-compete agreements are unfair because they restrain them from working. They argue that competition is good, and that these clauses go against public policy. The Georgia courts listened and enacted the Blue Pencil Rule in 2011. Although Georgia is a business-friendly state, this rule ensures that non-compete agreements and other restrictive covenants are fair to both employers and employees.
The Blue Pencil Rule allows the courts to modify an overly broad covenant in a non-compete agreement instead of voiding the entire contract. For example, employees could argue that restricting them from working for competitors in all of Georgia is unfair. The judge could revise that provision to a reasonable geographic area, such as five miles, while leaving the rest of the contract intact.
The courts also consider the type of business the employer is in when determining the legality of a non-compete contract. Typically, an employee cannot be stopped from taking a job with an employer whose business differs from the former employer’s. Our local Alpharetta attorneys can further advise on how this legislation may impact non-compete agreements in the state.
An employer must show the court that a non-compete agreement is protecting a legitimate business interest. If the time and geographic elements of the contract are reasonable, the court should uphold and enforce the agreement.
Legitimate business interests usually concern confidential information the former employee had access to or the importance of the former employee’s skills. For example, an employer could make a better case for restricting competition by a research scientist working on a COVID-19 vaccine than one restricting the lab’s receptionist. An experienced attorney could determine reasonable terms for a non-compete agreement depending on the circumstances.
Employers who believe an employee has breached a non-compete agreement can ask the courts for an injunction, which stops the employee from the competing acts. Any confidential information in the employee’s possession must be turned over or destroyed immediately, and the employee’s new employment could be terminated. An injunction is immediate to prevent any further harm to the employer. The court will hear the particulars at a later hearing.
Employers could also be awarded damages if they can show that the former employee’s breach caused them losses. In the previous example, if the research scientist copies the formula for a COVID-19 vaccine that the former employer was about to roll out, and the new employer releases it first, the former employee may be liable for lost profits. The new employer may also be liable for enticing the employee away to benefit from the formula. Our skilled non-compete lawyers can help assess the value of losses caused by a breach of contract and pursue the appropriate damages.
It can be a delicate balance between restricting trade and protecting your business from departing employees who may try to compete with you. As such, it is crucial to work with an attorney skilled in this area of law to create legally enforceable contracts.
At Sparks Law, an Alpharetta non-compete lawyer can help draft documents that suit your business needs and advise on legal action for any breaches by employees. Business owners with restrictive covenants in place, or those who need to add them to their business contracts, should contact our firm today for an initial consultation.