Results Matter Radio host Lee Kantor sat down last week with State Representative Wendell Willard and Burr & Forman attorney Chip Collins to discuss the ins and outs of Georgia’s new non-compete employment statute.
Although Georgia has only recently enacted a non-compete statute, it’s not from lack of trying. Rep. Willard, the sponsor of the bill that became the new statute, discussed the difficulty that Georgia has faced trying to codify non-compete standards. Georgia first passed a non-compete statute in 1989, only to have it ruled unconstitutional by the Georgia Supreme Court shortly thereafter. The state legislature passed another non-compete statute in 2009, which was supposed to become effective upon a majority referendum vote in November 2010 for a constitutional change that would authorize the new statute. Following the approval of the referendum, however, Collins raised with Rep. Willard some technical concerns that he and other practitioners had with the new statute that potentially exposed it to a legal challenge. As a result of those concerns, Rep. Willard sponsored what was essentially a re-passage of the statute in the 2011 legislative session, and Gov. Deal signed it into effect on May 11, 2011. The new statute is codified at OCGA § 13-8-50 and applies to all non-compete agreements signed after May 11, 2011.
Collins and Willard agreed that the new statute dramatically shifts the legal landscape of Georgia’s non-compete law in favor of employers, with perhaps the biggest impact being a Court’s ability under the new statute to “blue-pencil”, or modify, an overbroad agreement. Under the pre-statute rules, non-compete agreements were often deemed unenforceable by trial courts for being overbroad in scope—either in terms of duration, territory, or restricted activities. Now, however, almost any non-compete is potentially enforceable, at least to a degree deemed reasonable by the court tasked with enforcing it.
As reassuring as the effects of Georgia’s new non-compete law may be for employers, Collins and Rep. Willard give a strong warning to employers that this new statute only applies to non-compete agreements signed after May 11, 2011; the old pro-employee rules still apply to any agreements that pre-date the statute. Thus, if you are an employer who has not had a new agreement drafted and executed by your employees in the last year, they urge you to do so as soon as possible.
Wendell Willard, State Representative 49th District Georgia House of Representatives, is the co-sponsor of Georgia’s new non-compete employment statute that became effective last year and drastically changed the legal landscape for non-competes. Read more about the Georgia House of Representatives.
William (Chip) Collins, Jr. is the attorney who heads Burr and Forman’s new non-compete and trade secrets group. He continues to successfully help businesses of all types prevent unfair competition. Read more about Chip and his experience on the Burr & Forman site.
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Want more information on non-compete agreements and state legislation? Contact Burr & Forman for more insights on the enforceability of non-compete clauses.