BAD NEWS FOR GA EMPLOYEES RE NON-COMPETES

Attorneys Shed Light On Proposed “Non-Compete” Changes

Georgia lawmakers are working on amending the law regarding noncompetition covenants, but ultimately voters would have to decide whether the law changes. The issue is an important one for Georgia employers, who continue to worry about protecting trade secrets, confidential information and customer relationships when key employees jump ship.

Judges are finding most noncompete covenants to be unenforceable based on existing law that often does not match business reality. For example, tying covenants to specific areas a person actually visits is no longer relevant when business is done on computers, erasing physical boundaries.

Other states have more up-to-date noncompete laws, putting Georgia at a competitive disadvantage. What if a Massachusetts technology company wanted to move to the South to escape high taxes and was weighing Georgia or Florida, ask attorneys Henry Perlowski and Andrew Flake, in a white paper they prepared about the proposed changes to Georgia law.

Georgia noncompete law has not been modernized to match Massachusetts law, so “the company has a disincentive to relocate to Georgia, as opposed to going to Florida, where the agreements likely would be respected,” they write.

Mr. Perlowski and Mr. Flake are partners at Arnall Golden Gregory LLP, working in the firm’s litigation practice group. They point out that HB 173 provides more flexibility by allowing employers to list competitors the employee would be prohibited from joining for two to five years, depending on the
employee’s job.

The bill also allows judges to interpret the intent of noncompete ovenants and then modify them to determine what is fair and reasonable under real business circumstances. Right now, judges can only vote up or down on the enforceability of a noncompete covenant, regardless of when it was written and whether business circumstances have changed.

The bill “only applies to employees who truly have access to the kinds of sensitive business information that warrant protection,” the attorneys write.

In their view, the change would not lead to a significant increase in litigation because “most disputes under the new law will be resolved by prompt negotiations among former employers and new employers.”

Mr. Flake recently addressed Georgia lawmakers at a hearing at the Capitol about HR 178, which proposes amending the Georgia Constitution to enable the change in law. The constitutional amendment would need to pass both the Georgia House and Senate before it is placed on the November ballot as a referendum.

This is really bad news for Georgia employees. You sign an agreement, agree to certain terms and then a judge gets to change those terms to something you didn’t agree to? Strike 1. Strike 2 the legislature only cares about attracting business, not helping EMPLOYEES who have long served in the state. Strike 3 – Constitutional Change. Yikes. Shouldn’t that be an alarm going off, any act that has to change the state constitution!

Sorry GA – and I thought VA law was bad!

Lauren Ellerman

Lauren Ellerman

In 2011, Lauren Ellerman was named "Young Lawyer of the Year" by the Roanoke Bar Association for her work in the community. To speak with Lauren about your personal injury case, contact her at lellerman@frithlawfirm.com.