As an Atlanta, business lawyer, I deal with non-competition (non-compete) and Non-Solicitation laws on a regular basis. The Atlanta Small Business Lawyers at The Libby Law Firm specialize in Georgia Contract Law for small to medium sized businesses. The Libby Law Firm is a well-known and well-respected Atlanta Law Firm. Our Firm represents a numerous small and medium sized businesses in an abundance of capacities. In this Blog, I analyze the “Georgia Restrictive Covenants Act”, which I believe will significantly change relationships between employers and employee in small and medium sized businesses. I believe this will be especially true in small to medium sized businesses and businesses that employ in specialty areas.
THE “GEORGIA RESTRICTIVE COVENANTS ACT” – THE “BLUE PENCIL” COMES OUT
I write this Blog as an Atlanta Attorney, to let you know a most recent change in Georgia Contract Law, which is bound to have a profound affect on Atlanta Small Business Employer – Employee relations. Georgia voters have favored a constitutional amendment on November 2nd, 2010, which speculated on stringent trade laws; thereby setting constraints on trade and its laws for workers in Georgia. The newly enabled law allows Georgia Courts to repair Restrictive (Non-Compete) Covenants in Georgia Contracts, which bind the employee. In the past, any illegality in the Georgia Restrictive Non-Compete Covenants would have caused the whole contract to fail.
To put it plainly, a fatally drafted Georgia Non-Compete clause or Non-Solicitation Clause drafted by an employer will be given effect as if it were drafted within the limits of the law. Thus, it alters already existing law, which previously rendered the entire restrictive covenant ineffective. This means if any of the restrictive covenants in the contract were unenforceable, whether because of geographical restrictions, scope of work restrictions, or time constraints, the whole contract will be held void ab initio. Now, the Judge can write in the restrictive covenants so that they are enforceable. This action is referred to as “blue penciling” and is tantamount to the judge correcting the contract so that the restrictive covenants are enforceable.
The new law is viewed as dubious, given the incongruity/discrepancy in the date of it being effective. While those who drafted the Georgia House Bill 173 declared that it would be enforced from November 3rd, 2010, the Georgia Constitution asserts that new laws should come into effect from the beginning of the coming year, January 1st. How this drafting error will affect anyone legally is uncertain and chances are that it may have to do the rounds of the courts to determine how it will be applied.
In its most practical aspect, what concerns those employees who intend to start a new business venture, is that; (a) An employment contract implemented before November 3rd, 2010, consisting of a restrictive covenant (a Georgia Non-Compete or Non-Solicitation Clause) will not be qualified for the new law; and, (b) Conversely, any employment contract implemented after November 3rd, 2010, with restrictive covenants; in particular, the restrictive covenants referred to as Non-Compete or Non-Solicitation Clauses, will fall under the new law. However, given the discrepancy in the dates, employment contracts may not be carry the power of this law as the date of commencement, or the new law may be held unconstitutional. This grey area in Georgia Contract Law may be of great concern to those workers aspiring to compete with their previous employers. This is particularly true in a densely populated competitive area such as Atlanta.