Atlanta Business Lawyer Blog
In my law practice as an ATL Business Lawyer handling employment contracts, I have noticed a sharp increase in Georgia employment contract litigation/lawsuits regarding non-competition and non-solicitation clauses in Georgia employment contracts. It is my opinion that the weak US economy is responsible for the sharp increase in Georgia employment contract litigation. While I believe the US economy shows some signs if improvement, many Georgia companies continue to struggle to make sales forecasts and hold on to employees. To be more specific, it is my opinion the current tough business environment has caused an increase in the number of disputes and lawsuits that involve non-competition or non-solicitation agreements between former employers and employees. In Georgia, non-competition (commonly known by employment attorneys as Georgia non-compete contracts) and non-solicitation contracts are common in many industries and protect the company from former employees who might otherwise compete directly with the company or solicit business from the company’s clients.
Potential employers can become wary of candidates that they are considering hiring once it is discovered that they signed a Georgia non-compete or non-solicitation agreement at a former company. The fear is that the hiring company may be pulled into a lawsuit filed by the employee’s former company. When a former employee is being sued over a non-compete that is invalid, a qualified Atlanta Business Contract Attorney is essential in arguing to have the non-compete contract case dismissed thereby allowing the employee to continue to working.
Under Georgia law, many non-compete and non-solicitation contracts are found to be unenforceable for the simple reason that they are too broad in scope. For non-competition agreements, if only one clause in the agreement is found to be unenforceable then the entire agreement is invalid. When non-competition and non-solicitation agreements are properly written, they are key in protecting a company’s interests when employees leave. However, to guarantee that these written agreements are enforceable, companies must include restrictive provisions that are reasonable under Georgia employment law. Georgia has well-founded public policies that protect against restraints on trade, so any company using a non-competition or non-solicitation agreement needs to make the contract sufficiently narrow to be enforceable. In all Georgia non-compete lawsuits, three primary questions are asked and scrutinized by the Georgia courts in the following manner:
One: Is the scope of the duties of the employee substantially similar to the duties the employee undertook in his or her previous employment? Two: Is the time-period for which the former employee is prevented from competing short enough to be considered reasonable? In most cases, a two-year time-period in which a former employee cannot compete with his former employer is the outer time limit a Georgia court will hold enforceable. Third: are the restrictions on the geographic region in which the employee is prevented from working sufficiently narrow and effectively predetermined for the non-competition agreement to be held enforceable by a Georgia court?
Non-solicitation agreements are also a restraint on trade and undermine competition among Georgia businesses, and therefore heavily scrutinized by Georgia courts. However, as a general rule they are held enforceable by Georgia courts much more often than non-competition clauses. Non-solicitation clauses prevent a former employee from taking clients away from his former employer. Actions by a former employee that would be grounds for a Georgia court to order and injunction due to a non-solicitation agreement would be the use of his or her former employer’s client list to contact clients of the former employer and solicit their business over to his or her new employer.
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