For many of us, summer holidays are over, the kids are back in school, and it is a good time to take stock of languishing items on our to-do lists. For employers that have restrictive covenant agreements with employees in Georgia, one of those to-do items should be to review the employee non-solicitation provisions in their employment agreements.
Earlier this summer, in North American Senior Benefits v. Wimmer, the Georgia Court of Appeals issued a decision that likely will make it substantially more challenging for employers to enforce employee non-solicitation provisions. That case held, pursuant to Georgia’s Restrictive Covenants Act, OCGA § 13-8-50 et seq., that a restrictive covenant that extends beyond the end of an individual’s employment, and undertakes to prohibit the individual from soliciting former coworkers, is unenforceable if it lacks an explicit geographic limitation.
The key statutory provision for the Court was OCGA § 13-8-53(a), which permits enforcement of restrictive covenants only “so long as such restrictions are reasonable in time, geographic area, and scope of prohibited activities.” The statute sets forth but two exceptions to the requirement of a geographic limitation: (a) restrictions on efforts to solicit a former employer’s customers (OCGA § 13-8-53(b)), and (b) to trade secrets (OCGA § 13-8-53(e)). As the Court held, the statute does not “set out an exception for restriction on solicitation of a former employer’s employees. So it is not within our purview to create one.”
Given the Court’s decision, employers operating in Georgia should review their employee non-solicitation provisions, both in existing agreements and in forms for future agreements. If such provisions do not include geographic limitations, employers should consider modifying the provisions to include them. Also, to the extent the agreements do not contain a provision allowing for “blue-penciling” of potentially overbroad clauses into a more enforceable form, that should be added as well, as such provisions may be followed under Georgia law. For existing employees, continued employment is sufficient consideration in Georgia for a new or modified employment agreement.
We will continue to monitor and report on further developments in Georgia’s law regarding employee non-solicitation clauses.
- Member of the Firm