For many of us, the summer holidays are over, the kids are back in school and it's a good time to take stock of the slow things on our to-do list. For employers who have restrictive contractual agreements with employees in Georgia, one of these tasks should be to review the employee non-solicitation provisions in their employment contracts.
Earlier this summer, the Georgia Court of Appeals issued a ruling in North American Senior Benefits v. 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 a person's employment and requires the person to prohibit the person from recruiting former colleagues, is not enforceable if there is no explicit geographical limitation.
The key statutory provision for the court was OCGA § 13-8-53(a), which permits the enforcement of restrictive covenants only “so long as such restrictions are reasonable in time, geography, and the scope of the prohibited activities.” The law provides only two exceptions to the geographic restriction requirement: (a) restrictions on efforts to solicit a former employer's customers (OCGA § 13-8-53(b)) and (b) on trade secrets (OCGA § 13- 8-53(e)). As the court noted, the law “provides no exception for restricting the recruitment of employees of a former employer.” So it’s not within our purview to create one.”
In light of the Court's decision, employers operating in Georgia should review their employee non-solicitation provisions, both in existing agreements and in forms for future agreements. If such provisions do not contain geographic restrictions, employers should consider amending the provisions to include them. To the extent that the agreements do not contain a provision allowing potentially overly broad clauses to be converted into a more enforceable form, this should also be added, as such provisions can be followed under Georgian law. For existing employees, continued employment in Georgia is sufficient consideration for a new or modified employment contract.