1. Are non-compete agreements enforceable in Georgia?
Under Georgia’s Restrictive Covenants Act, located at O.C.G.A. § 13-8-53 non-compete agreements – as opposed to non-solicit and non-disclosure agreements – are limited to those employees who during their employment:
-
- Customarily and regularly solicit for the employer customers or prospective customers;
- Customarily and regularly engage in making sales or obtaining orders or contracts for products or services to be performed by others;
- Perform the following duties:
- Have a primary duty of managing the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;
- Customarily and regularly direct the work of two or more other employees; and
- Have the authority to hire or fire other employees or have particular weight given to suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees; or
- Perform the duties of a key employee or a professional.
For those categories of employees, non-compete agreements are enforceable in Georgia, so long the non-compete agreement is also reasonable in scope, necessary to protect one or more legitimate business interests, and compensation was provided for entering into the non-compete agreement.
Valid business interests include access to customer lists, trade secrets, and similar highly confidential records. The scope of the non-compete must be reasonable in terms of length of time and geographic restrictions. What is reasonable for one industry may not be reasonable for others.
2. Are non-compete agreements enforceable if I’m terminated without cause?
Yes. In Georgia, unless there’s a provision in the employment agreement stating otherwise, non-compete provisions are generally enforceable regardless of the circumstances of the termination.
3. What do I do after receiving a cease-and-desist letter about a non-compete agreement?
Detailed guidance on what to do after receiving a cease-and-desist letter is provided in section three of this previous article. At a minimum, an individual or competitor that receives a cease-and-desist letter should hire an attorney and provide a detailed response. As a practical matter, when a cease-and-desist letter is ignored, the company sending it typically assumes it is because the individual or competitor has no valid defense. If a lawsuit seems inevitable, it is also worth discussing with an attorney filing a lawsuit first. Filing a lawsuit first enables the party to decide the venue of the court and frame the dispute based on his or her side of the story.
4. What to do if I don’t have a copy of my non-compete agreement?
Ask your employer or former employer for a copy of all of your employment agreements, including any restrictive covenants.
5. Is a non-compete enforceable if I am unable to work anywhere because of it?
Maybe, but a court would likely narrow the geographic scope of the non-compete and enforce it as modified. As background, statute O.C.G.A. § 13-8-56 provides that a geographic territory of a non-compete agreement which includes the areas in which the employer does business at any time during the parties’ relationship, even if not known at the time of entry into the non-compete agreement, is reasonable, provided that:
- The total distance encompassed by the non-compete agreement also is reasonable;
- The non-compete agreement contains a list of particular competitors as prohibited employers for a limited period of time after the term of employment or a business or commercial relationship; or
- Both of the above requirements are satisfied.
Additionally, under statute O.C.G.A. § 13-8-53 courts in Georgia are allowed to engage in so-called “blue penciling”, which means they can modify a non-compete agreement that is overly broad in the territory to make it reasonable.
6. Is my non-compete agreement enforceable if I signed it after starting employment?
Yes. A non-compete agreement is enforceable even if it is signed after starting work for an employer. Continued employment is considered sufficient consideration to validate a non-compete agreement in Georgia.
7. Is it possible to get out of a non-compete agreement?
Sometimes. Depending on your relationship with your former employer, it may be possible to negotiate the length and scope of a non-compete agreement. Often, the best time to do this is during exit negotiations. In Georgia, a non-compete may also be unenforceable if it is overbroad or causes undue economic hardship. In most cases, a court in Georgia will only modify non-compete agreement and not invalidate it completely.
8. What happens if I violate my non-compete agreement?
If you violate a non-compete agreement, you risk being sued for damages and a court order that enjoins you from continuing to violate the non-compete agreement. It is important to speak with an attorney before deciding to violate a non-compete agreement in Georgia.
Violating a non-compete agreement may expose you to paying substantial damages to your former employer, potentially even their legal fees. If you violate your non-compete agreement by working for a competitor, then your former employer may sue your new employer as well for tortious interference with the non-compete agreement.
9. Are non-compete agreements enforceable against independent contractors in Georgia?
Yes. Non-compete agreements are enforceable against independent contractors if they are in one of the categories of persons covered by statute O.C.G.A. § 13-8-53.
10. What should I ask for when my employer asks me to sign a non-compete?
You should ask for time to review the agreement with a lawyer. You should also negotiate the time, geographic scope, and compensation for signing the agreement. Most non-compete agreements run from six months to two years. You should try to keep the restriction as short as possible. You should also request that the non-compete agreement only cover the geographic area where you actually work, not every office the company may have. You are giving up an important right – the right to work wherever you want. You should demand to be compensated for giving up that right. Finally, you should not agree to pay your employer’s legal fees for enforcing the non-compete agreement.
11. What should I do if my employer doesn’t let me have an attorney review a non-compete agreement?
This is a red flag. You should insist that you have time to consider and review a non-compete agreement. Your employer is asking you to give up an important right – the right to work wherever you wish. You should take time and fully weigh the decision.
12. Can I be fired for refusing to sign a non-compete agreement?
Yes. Georgia is a “right to work” state. That means you can be fired for virtually any reason so long as it isn’t a protected category, such as race, color, religion, sex (including pregnancy, sexual orientation, or gender identity), national origin, age (40 or older), disability and genetic information (including family medical history).
13. Can an employer require a non-compete agreement as part of a severance package?
Yes. Employers in Georgia are generally not required to provide a severance package, so they can insist on including a non-compete provision in a severance agreement.
In certain limited circumstances involving ERISA-governed benefit plans, employees may be entitled to severance if their plan requires it. Under this rare circumstance, Employers may not add additional conditions to the severance agreement.
14. A former employee is violating a non-compete agreement. What can I do?
Detailed guidance on what to do when a former employee or contractor is violating a non-compete is provided in this previous article. In sum, speak with a Georgia non-compete attorney immediately. An attorney who specializes in non-compete disputes can quickly assess whether the non-compete agreement is enforceable, the costs of enforcement, and the potential defenses or counterclaims the former employee or contractor might assert. There are times when a simple cease-and-desist letter can gain compliance. There are other times when it is necessary to file a lawsuit to force the employee to abide by their agreement. Time is of the essence when you discover that a former employee is violating their non-compete agreement. If you wait too long, a Court may not issue an injunction forcing the employee to stop violating their agreement. Contact us. We can help you evaluate what strategy to pursue.