TITLE 13 CONTRACTS

Section 8. Illegal and Void Contracts Generally, 13-8-1 through 13-8-59.

ARTICLE 4 RESTRICTIVE COVENANTS IN CONTRACTS

13-8-53. Enforcement of covenants; writing requirement; determining competitive status; effect of failure to comply; time and geographic limitations.

Notwithstanding any other provision of this chapter, enforcement of contracts that restrict competition during the term of a restrictive covenant, so long as such restrictions are reasonable in time, geographic area, and scope of prohibited activities, shall be permitted. However, enforcement of contracts that restrict competition after the term of employment, as distinguished from a customer nonsolicitation provision, as described in subsection (b) of this Code section, or a nondisclosure of confidential information provision, as described in subsection (e) of this Code section, shall not be permitted against any employee who does not, in the course of his or her employment:
1. Customarily and regularly solicit for the employer customers or prospective customers;
2. Customarily and regularly engage in making sales or obtaining orders or contracts for products or services to be performed by others;
3. Perform the following duties:
  1. Have a primary duty of managing the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;
  2. Customarily and regularly direct the work of two or more other employees; and
  3. 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
4. Perform the duties of a key employee or of a professional.
Notwithstanding any other provision of this chapter, an employee may agree in writing for the benefit of an employer to refrain, for a stated period of time following termination, from soliciting, or attempting to solicit, directly or by assisting others, any business from any of such employer's customers, including actively seeking prospective customers, with whom the employee had material contact during his or her employment for purposes of providing products or services that are competitive with those provided by the employer's business. No express reference to geographic area or the types of products or services considered to be competitive shall be required in order for the restraint to be enforceable. Any reference to a prohibition against "soliciting or attempting to solicit business from customers" or similar language shall be adequate for such purpose and narrowly construed to apply only to: (1) such of the employer's customers, including actively sought prospective customers, with whom the employee had material contact; and (2) products or services that are competitive with those provided by the employer's business.
1. Activities, products, or services that are competitive with the activities, products, or services of an employer shall include activities, products, or services that are the same as or similar to the activities, products, or services of the employer. Whenever a description of activities, products, or services, or geographic areas, is required by this Code section, any description that provides fair notice of the maximum reasonable scope of the restraint shall satisfy such requirement, even if the description is generalized or could possibly be stated more narrowly to exclude extraneous matters. In case of a post-employment covenant entered into prior to termination, any good faith estimate of the activities, products, or services, or geographic areas, that may be applicable at the time of termination shall also satisfy such requirement, even if such estimate is capable of including or ultimately proves to include extraneous activities, products, or services, or geographic areas. The post-employment covenant shall be construed ultimately to cover only so much of such estimate as relates to the activities actually conducted, the products or services actually offered, or the geographic areas actually involved within a reasonable period of time prior to termination.
2. Activities, products, or services shall be considered sufficiently described if a reference to the activities, products, or services is provided and qualified by the phrase "of the type conducted, authorized, offered, or provided within two years prior to termination" or similar language containing the same or a lesser time period. The phrase "the territory where the employee is working at the time of termination" or similar language shall be considered sufficient as a description of geographic areas if the person or entity bound by the restraint can reasonably determine the maximum reasonable scope of the restraint at the time of termination.
Any restrictive covenant not in compliance with the provisions of this article is unlawful and is void and unenforceable; provided, however, that a court may modify a covenant that is otherwise void and unenforceable so long as the modification does not render the covenant more restrictive with regard to the employee than as originally drafted by the parties.
Nothing in this article shall be construed to limit the period of time for which a party may agree to maintain information as confidential or as a trade secret, or to limit the geographic area within which such information must be kept confidential or as a trade secret, for so long as the information or material remains confidential or a trade secret, as applicable.

(Code 1981, §13-8-53, enacted by Ga. L. 2011, p. 399, § 4/HB 30; Ga. L. 2012, p. 775, § 13/HB 942.)

The 2012 amendment, effective May 1, 2012, part of an Act to revise, modernize, and correct the Code, revised punctuation in paragraph (c)(1).

JUDICIAL DECISIONS

Non-solicitation of patients clause unenforceable.

- Non-solicitation covenant in physicians' pre-2011 employment contracts would prevent the physicians from having any communication with the employer's patients, even if those patients sought out the physicians, which was unreasonable and unenforceable, but geographic limitations were not unreasonable and were enforceable. Burson v. Milton Hall Surgical Associates, LLC, 343 Ga. App. 159, 806 S.E.2d 239 (2017).

Restrictive covenants in non-compete unenforceable.

- Because the court had already found that one of the sub-parts of the non-compete was unenforceable under Georgia law, none of the restrictive covenants contained in the non-compete were enforceable. Boone v. Corestaff Support Servs., 805 F. Supp. 2d 1362 (N.D. Ga. 2011).

Because a Georgia House Bill was unconstitutional and void when it was enacted, the General Assembly did not act to change Georgia's public policy on restrictive covenants in employment contracts. Therefore, a district court did not err in applying Georgia law to find such restrictive covenants in a particular employment contract were unenforceable. Becham v. Synthes USA, F.3d (11th Cir. June 4, 2012)(Unpublished).

Non-solicitation clauses in parties' employment agreement were written overly broad, but because the statute commanded courts to construe them narrowly, they were enforceable; however, the non-competition clause was void and unenforceable because the clause lacked a geographic limitation. Lifebrite Labs., LLC v. Cooksey, F. Supp. 2d (N.D. Ga. Dec. 9, 2016).

Factual issues remaining in restrictive employment contract dispute.

- In an agent's suit against an insurance company seeking to invalidate restrictive covenants in an agreement to sell insurance products, the court held that the trial court properly denied the agent's motion for judgment on the pleadings as to a confidential and proprietary information provision because it could not be said as a matter of law that the information defined as such did not constitute a trade secret or merely confidential information relating to the company's business. Holland Ins. Group, LLC v. Senior Life Ins. Co., 329 Ga. App. 834, 766 S.E.2d 187 (2014).

Syfert Injury Law Firm

2018 Georgia Code 13-8-53 | Car Wreck Lawyer