Many Georgia businesses want to require their employees to sign a noncompete agreement. They also want to make certain that a noncompete agreement is enforceable. The law governing the enforceability of noncompete agreements in Georgia has changed several times in the last several years. As the law stands now, noncompete agreements are enforceable if they meet certain fundamental requirements.
Making noncompetes enforceable
Prior to 2011, amendments to the state’s law regarding noncompete agreements were unenforceable. An amendment to the state’s constitution and passage of a statute spelling out the standards for creating an enforceable noncompete agreement were required before a noncompete agreement could routinely be presumed to be enforceable.
Under the old rule, a noncompete was unenforceable if any of its terms were unenforceable. The new law created what is known as the “blue-pencil” doctrine; under this rule, a court can remove—“blue pencil”—any unenforceable provision in a noncompete agreement to preserve the rest of the terms.
Factors taken into consideration
Following the changes to Georgia law, several factors must be satisfied to make the agreement enforceable.
- First, the agreement must be based on consideration flowing from the employer to the employee. Usually, the offer of employment is deemed to be satisfactory consideration. If the agreement is signed after the term of employment has commenced, additional consideration, such as a cash bonus, must be paid to the employee.
- Second, the application of the “blue pencil” rule as discussed above will be applied to resolve a challenge to a noncompete agreement.
- Third, only four classes of employees can be bound by a noncompete agreement. These classes include sales staff, vital employees or company professionals, management employees, and employees who regularly solicit business from customers.
The employer also has the right to include future territorial expansion in the geographic reach of the noncompete. Any provision in a noncompete intended to protect the confidentiality of the employer’s proprietary information will remain in force as long as this information must be protected from disclosure.
Sound legal advice can be beneficial for business owners
Even with the recent changes in the law of noncompete agreements in Georgia, preparing an enforceable agreement may require the drafting abilities of an experienced corporate attorney.