Georgia's restrictive covenant law does not require that restrictive covenants contain express geographic limitations

In June 2023, the Georgia Court of Appeals ruled in North American Senior Benefits, LLC v. Wimmer that an employee non-solicitation agreement must contain an express geographic limitation to be enforceable. However, on September 4, 2024, the Supreme Court of Georgia reversed the Wimmer decision of the Georgia Court of Appeals and ruled that the Georgia Restrictive Covenants Act (GRCA) does not require restrictive covenants to contain an express geographic limitation in order to be enforceable , but not employee non-compete and non-solicitation agreements governed by Section 13-8-53(a) of the GRCA must still be reasonable in the geographic scope.

The Georgia Supreme Court Decision

In Georgia, the enforceability of restrictive covenants is governed by GRCA, OCGA § 13-8-50 et seq. The GRCA provides that employment contracts that restrict competition must be “reasonable in terms of the time, geographic area and scope of the prohibited activities.” OCGA § 13-8-53(a). (Different standards apply to non-solicitation agreements and customer confidentiality agreements.)

In evaluating the employee non-solicitation agreement at issue in the Wimmer case, the Georgia Court of Appeals held that a restrictive covenant must contain an express geographic limitation to be considered geographically reasonable under the GRCA requirements, and that a Georgia court must do so may not add or “blue pencil” in this material term if it is not present.

However, the Georgia Supreme Court has now ruled that an express geographic restriction is not required in the GRCA – and that a restrictive covenant is not inherently unenforceable if one is not included. The court noted that “there is nothing in the text of [the GRCA] stipulates that a restrictive covenant must contain an explicit geographical term, and does not do so [it] prohibit the geographical scope of an agreement from being implied.”

The court reasoned that while the GRCA requires that a restrictive covenant be geographically appropriate—including through “adequate description.”[ing]“and a “fair notice of the widest possible reasonable scope of the restriction” – requiring an express geographical restriction would be “imposed”.[e] a more stringent standard than that imposed by the GRCA. See OCGA §§ 13-8-53(c)(1)-(2).

The Court found that the true purpose of the GRCA was to codify a “more permissive and flexible approach to restrictive covenants,” which supported its conclusion that a strict requirement for express language was not necessary.

The Georgia Supreme Court remanded the case to the trial court to determine whether the employee non-solicitation clause at issue in Wimmer was reasonable in its geographic scope given the totality of the circumstances. For example, as the Supreme Court of Georgia suggests, the trial court must decide whether the agreement should have “a geographic scope that is tailored to the covered employees’ current places of residence and employment” or whether it should be given “global or universal effect”.

What does this mean for employers?

While the Georgia Supreme Court's decision addresses the enforceability of an employee non-solicitation agreement, its ruling is not limited to this type of provision. In fact, the Georgia Supreme Court's decision appears to apply not only to employee non-solicitation agreements, but also to non-compete agreements under Section 13-853(a) of the GRCA.

However, employers should consider maintaining employee non-solicitation and non-compete agreements or adding explicit geographic restrictions. In fact, the recommended method for maximizing the chances that a Georgia court will find such agreements to be geographically reasonable is to include a reasonable geographic limitation.

Georgia's case law regarding restrictive post-employment covenants is complex and many areas leave room for interpretation and/or require further guidance. Employers should seek legal advice on how Georgia law applies to their specific circumstances.