If you are an employer, it is important to understand the role of restrictive covenants in an employment agreement. These clauses prevent departing employees from damaging your business, but they must follow Georgia law to be legally enforceable.
To protect your business, work with a Georgia restrictive covenants lawyer at Sparks Law. Our skilled contract attorneys can help you draft an agreement that prevents future problems before they arise.
Although employees usually must refrain from disparaging their company in general, traditional restrictive covenants are often more specific, limiting employees’ actions for a specific time and geographic area. The four main types of restrictive covenants are:
In Georgia, a non-compete clauses must provide consideration to the agreement in order to be enforceable. Essentially, this means that both parties give up something of value in exchange for something else. In this case, an employee might give up the right to work for other businesses in exchange for the job being offered by the company requesting the non-compete.
Employers must have a real business interest when asking an employee to sign a non-compete. Generally, an employer uses a non-compete agreement to protect confidential or proprietary information that the employee learns on the job. The employer does not want employees to use this information at their next job.
A non-compete must also be reasonable. An employer cannot stop an employee from working in a wide geographic area forever. Depending on the type of business, employees may be restricted within a certain radius and for several months. A skilled restrictive covenants lawyer can further advise on what may be included in a Georgia non-competition agreement.
Non-disclosure or confidentiality agreements forbid an employee from talking about critical aspects of an employer’s business to third parties who could benefit from the knowledge. Businesses often use non-disclosure agreements to protect trade secrets, methodology, and any information the company deems confidential.
Former employees in Georgia who have material contact with an employer’s customers cannot solicit or accept business from them. This ban extends for a reasonable time limit, usually two years. A seasoned attorney at Sparks Law can help draft a non-solicitation agreement that safeguards your business interests in Georgia.
When employees leave a company for another job, they may try to persuade other employees to join them. To stop this harmful practice, employers use non-solicitation or non-recruitment agreements.
However, the parameters of these covenants have been heavily debated in court. For instance, in 2017, the Georgia appeals court overturned a decision by the trial court in CMGRP, Inc. v. Gallant, No. A17A1168 (Ga. Ct. App. Oct. 4, 2017). The trial court had previously invalidated a non-solicitation agreement that did not specify a geographic area and did not restrict solicitation to the workers that the former employee knew.
The Appeals Court reversed the lower court’s decision, allowing employers to restrict employee recruitment completely and not just to known employees. It also reversed the geographic limitation, stating that it was not a factor in enforceable non-solicitation agreements. However, because other Georgia Appeals Courts have ruled differently, an employer should consult a local attorney to ensure their restrictive covenants are legally enforceable.
In 2011, Georgia enacted a rule of severability for most restrictive covenants. This allows judges to modify an overly broad covenant to make it enforceable instead of throwing out the entire agreement. However, the best way of ensuring that a restrictive covenant is enforceable in Georgia is to work with a skilled attorney in the community when drafting your agreement.
It is a fact of life that some employee departures will go smoothly, and some will not. Either way, an employer can safeguard their company by using restrictive covenants to control what a former employee can say or do regarding the company. Employees should know these restrictions upfront to avoid future problems.
If you are a business owner with employees, retain a Georgia restrictive covenants lawyer to review the documents you are asking employees to sign. At Sparks Law, our team is skilled at revising or drafting these types of contracts to suit your needs. Call for your initial consultation today.