Georgia courts may not apply foreign law to restrictive covenants that do not comply with the Georgia Restrictive Covenants Act – Employment Agreement

September 20, 2023

Little Mendelson

To print this article, you simply need to be registered or log in to

On September 6, 2023, the Georgia Supreme Court reiterated that Georgia courts must first determine whether a restrictive covenant is enforceable under Georgia law before applying a foreign choice of law provision.

In Motorsports of Conyers, LLC v. Burbach, the Supreme Court of Georgia held that before a Georgia court can enforce a restrictive covenant in a contract that provides for the application of foreign law, the Georgia court must first find that the restrictive agreement is “appropriate”. under the GRCA. The Supreme Court of Georgia further stated that if a restrictive covenant is unreasonable under Georgia's Restrictive Covenant Act (GRCA), it is a violation of Georgia's public policy and therefore cannot be enforced based on the foreign choice of law provision.

In Motorsports of Conyers, the trial court applied a Florida choice of law clause to govern the employment contracts at issue without first determining whether the restrictive covenants in the contracts complied with the GRCA. The Georgia Court of Appeals reversed, holding that application of the GRCA is the first step in analyzing whether the public policy exception overrides the parties' choice of foreign law. The Georgia Supreme Court affirmed this reversal, finding that the trial court had not applied the proper framework in determining the enforceability of the restrictive covenants. In clarifying the framework, the Supreme Court of Georgia noted that while the GRCA had provided a more flexible and permissive approach to the application of foreign law to restrictive covenants in Georgia than previous adjudicative statutes prior to the GRCA, Georgia law remained the “touchstone” be any restrictive contract analysis.

In short, if a Georgia court finds that a restrictive covenant is appropriate under the GRCA, it may “respect the choice of law clause and apply foreign law to determine whether to enforce it…”. However, if a Georgia court finds that a restrictive covenant under GRCA is unreasonable (in scope, duration, or geographic scope). The court “may not apply foreign law to enforce them.” Instead, the contract would be governed by Georgia law, and the court would therefore apply Georgia law, including the blue penciling provision of the GRCA, which could allow partial enforcement of the restrictive covenant.

The GRCA's blue penciling provision allows Georgia courts some discretion to modify a restrictive covenant to make it reasonable (and enforceable). However, as previously noted, courts have the discretion to blue pencil restrictive covenants in order to enforce them. In accordance with Georgia law, a court may not impose certain provisions, including a geographic restriction Add a document that is missing this essential term. On this particular issue, the Court was not persuaded that, given the GRCA's language “in favor of adequate protection of all legitimate business interests established by the person seeking enforcement,” a court could simply choose to be unreasonably restrictive Rejecting covenants but they agreed left open questions about the extent of a trial court's discretion to decide whether to postpone a restrictive covenant to another day.

The Supreme Court of Georgia reversed the trial court's decision and remanded the case to the trial court to apply the formulated framework.

Employers should consider revising restrictive covenants that apply to Georgian employees who do not meet the requirements under Georgian law, even if the restrictive covenant provides for a foreign choice of law.

The content of this article is intended to provide a general guide to the topic. Specialist advice should be sought regarding your specific circumstances.

POPULAR ARTICLES RELATING: Employment and HR from the United States

Employee, Health and Welfare Benefits Chart

Kutak Rock LLP

The IRS has released 2024 health and welfare plan limits, which will adjust each year to reflect rising costs of living. Employers should review their benefit plans to ensure they reflect these new limits.