Last summer, as discussed in this blog, the Georgia Court of Appeals issued a decision in N. Amer. Senior Benefits, LLC v. Wimmer, which presented potential challenges for employers seeking to enforce employee non-solicitation provisions.
In this case, pursuant to Georgia's Restrictive Covenants Act, OCGA § 13-8-50 et seq., it was held that a restrictive covenant that extends beyond the termination of an individual's employment and requires the individual to prohibit the individual from recruiting former colleagues is not is enforceable if there is no explicit geographical restriction.
In an opinion dated September 4, 2024, the Supreme Court of Georgia reversed this decision. The relevant statutory provision in both cases is OCGA § 13-8-53(a), which permits the enforcement of restrictive covenants “provided such restrictions are reasonable in time, geography, and the scope of the prohibited activities.” The Supreme Court held that “nothing in the text of subsection (a) requires that a restrictive covenant contain an explicit geographical term, nor does subsection (a) prohibit the geographic scope of an agreement from being implicitly expressed.”
The Supreme Court continued: “In short, the plain language of subsection (a) relating to geographic restrictions on competition requires that any such restriction be reasonable, regardless of whether the restriction is expressly stated or implied.” The Court also noted that its interpretation of OCGA § 13-8-53(a) is consistent with the Restrictive Covenants Act's “more permissive and flexible approach to restrictive covenants.”
Of course, the Georgia Supreme Court's opinion is a boon for employers seeking to enforce employee non-solicitation provisions, but that does not mean such provisions are always enforceable. In fact, in remanding the case to the trial court, the Supreme Court reminded that court of the applicable standard: the geographic scope of employee non-solicitation provisions must be examined for reasonableness “in light of the totality of the circumstances, including, but not limited to.” to the entire geographical area covered by the provision, the business interests justifying the restrictive agreement, the nature of the business in question and the temporal and scope limitations of the agreement.”