One of the best ways to preemptively protect your business is having your employees sign an employment agreement with restrictive covenants. These clauses are intended to protect the employer’s confidential information, trade secrets, and customer relationships. When making the decision to draft an employment contract with restrictive covenants it is important to consult with an Atlanta restrictive covenants attorney, because restrictive covenants are subject to strict scrutiny by the courts and are only enforceable if they are reasonable in scope, duration, and geographic reach and necessary to protect the employer’s legitimate business interests.
Restrictive covenants, also known as non-compete clauses, non-solicitation clauses, non-disclosure clauses, non-circumvention, and the newer idea of non-disparagement clauses, are provisions in an employment contract that limit an employee’s ability to work for a competitor, solicit the employer’s customers or clients after their employment ends, or to talk negatively about the company after their departure.
There are several types of restrictive covenants that can be included in an employment contract, including:
A non-compete is a type of restrictive covenant that prohibits an employee from working for a competitor for a specified period of time after their employment ends. A non-compete agreement can be included in an employment contract or in a separate document. They are typically enforceable if they are reasonable in scope, duration, and geographic reach and necessary to protect the employer’s legitimate business interests. However, if a non-compete agreement is overly restrictive, it may be considered unenforceable. It’s important to note that the enforceability of non-compete agreements varies from state to state. In Georgia, a typical non-compete will include a 20-mile radius from the place of business and be in effect for 2 years after employment.
A non-disclosure (NDA) is a clause in which an employee agrees to not disclose confidential information belonging to the other company. The purpose of a non-disclosure agreement is to protect an employer’s confidential and proprietary information, such as trade secrets, business plans, customer data, customer lists, vendor lists, pricing methods and costs, efficiencies that a business has figured out, and employee lists like applicants. Like non- competes it is important to note that NDAs are enforceable by law, but they should be specific, clear, and reasonable in order to be legally binding and to avoid disputes.
A non-solicitation clause, also known as a non-competition clause, prohibits an employee from soliciting the company’s customers or clients for a specified period of time after the relationship ends. It also prevents an employee from soliciting other employees to work for a competitor or leave the company. The purpose of a non-solicitation clause is to protect the employer’s customer relationships and goodwill. These clauses are typically used in situations where an employee has developed a strong relationship with the employer’s customers, and the employer wants to prevent the employee from taking those customers with them when they leave. Like other restrictive covenants, non-solicitation clauses are subject to strict scrutiny by the courts and are only enforceable if they are reasonable in scope, duration, and geographic reach and necessary to protect the employer’s legitimate business interests.
A non-circumvention clause restricts an employee from using confidential information or business relationships obtained through their employment to compete against the employer or to solicit their clients or customers after their employment ends. The purpose of this clause is to protect the employer’s business interests and to prevent the employee from using confidential information obtained during their employment to unfairly compete against the employer.
A non-disparagement clause prevents employees from making derogatory comments about the company. These clauses typically define what the employee cannot say and for how long after resignation or termination. Since a company’s goodwill and reputation affect its value, a non-disparagement clause supports these elements’ continued success.
The legality of restrictive covenants in an employment contract varies from state to state and is subject to strict scrutiny by the courts. In general, restrictive covenants are enforceable if they are reasonable in scope, duration and geographic reach, and are necessary to protect the employer’s legitimate business interests. However, if the restrictions are overly broad or impose an undue hardship on the employee, they may be considered unenforceable. Additionally, courts may also consider the public policy implications of enforcing restrictive covenants and whether they would restrict competition in the market. It is important to note that restrictive covenants are subject to a balancing test, weighing the employer’s interests in protecting their business against the employee’s right to work. Employers should consult with an Atlanta contract attorney when drafting restrictive covenants in an employment contract to ensure they are legally compliant and enforceable.
It is imperative to work with an Atlanta business attorney when it comes to drafting an employment agreement with restrictive covenants. An Atlanta business attorney can draft legally compliant and enforceable restrictive covenants in an employment contract that protects the employer’s legitimate business interests and also balances the employee’s right to work. Also making sure it would be enforceable under Georgia law. An Atlanta business attorney can also review your existing restrictive covenants to ensure their enforceability. Not only can an Atlanta business attorney help with reviewing and drafting they can also assist in negotiations with an employee, or provide guidance and advice on how to handle situations where an employee has violated a restrictive covenant advising on taking appropriate action.
Overall, an Atlanta business attorney can provide the expertise and support needed to navigate the complexities of restrictive covenants and help businesses protect their interests and achieve their goals.
Sparks Law’s Atlanta restrictive covenants attorneys can provide expert advice on drafting, negotiating, and enforcing a restrictive covenant. We can ensure that your contract is written in a way that would be enforceable under Georgia law. We are also available to review restrictive covenants that you may receive from an employer, this is important to do before signing and agreeing to terms that may prevent you from future employment. Contact us today and let’s work together to protect your company.