August 31, 2011
Authored by: benefitsbclp
On May 11, 2011, Georgia Governor Nathan Deal signed House Bill 30 into law, beginning a new era for non-compete, non-disclosure, and non-solicitation agreements under Georgia. Georgia historically has been an inhospitable forum for employers seeking to enforce restrictive covenants against former employees. Georgia’s new Restrictive Covenant Act (the “Act”) clarifies and strengthens the ability of employers to restrict conduct during and after employment.
Importantly, the Act applies only to Georgia restrictive covenant agreements entered into on or after May 11, 2011. Employers with operations in Georgia should revisit their restrictive covenant agreements and consider revising their agreements to take advantage of protections of the new law. Historically, Georgia law has not required new or additional consideration to support a new restrictive covenant agreement signed by a current employee, so employers are in a good position to strengthen their competitive protections, at this time, should they choose to do so.
Perhaps the most significant change of the Act, courts are now expressly authorized to modify or “blue pencil” an overbroad restrictive covenants entered into on or after May 11, 2011. Accordingly, courts have the discretion, but are not obligated, to strike out or remove language that renders the restrictive covenant unenforceable. Given the prospective nature of the Act, Georgia common law will still govern agreements entered into prior to the effective date of the Act, which means if any restrictive covenant in such agreements is overbroad it will not be enforced.