Non-Compete and Non-Solicitation Agreements
Sometimes an employer will ask or require an employee as a condition of their employment to enter into what are called restrictive covenants, or legally enforceable promises not to do certain things during or after the employment relationship ends. Three of the most common types of restrictive covenants are confidentiality agreements or non-disclosure agreements, non-competition agreements, and non-solicitation agreements. Employers may also include these restrictive covenants in separation agreements or severance agreements that they want employees to sign.
A confidentiality or non-disclosure agreement is an agreement that an employee will not share or disclose certain information outside of the company, or with any other person or company after leaving the employment of the company. Such agreements may define the type of information that must be held confidential, or may refer to the Georgia Trade Secrets Act, which provides protection for certain information that has economic value because it is not widely known to or ascertainable by others, and for which reasonable efforts to keep it secret have been undertaken. The problem arises when you want to work for another company, or engage in another business in which you might use information, such as a customer list or potential customer list, or a design or process for doing something, that your former employer could argue is covered by the confidentiality provision you signed. In such circumstances, it is advisable to consult with an experienced employment law attorney at Hall & Lampros who can help you understand your risk.
A non-competition agreement is an agreement that an employee will not start a business that competes with his former employer’s business, or work for a competitor business, within a particular area or for a particular period of time. The Georgia Restrictive Covenants Act provides that these agreements are enforceable when they meet certain requirements, including reasonableness in geographic scope and the length of time they apply. A non-competition provision should also give fair notice of the maximum scope of activities, products, or services restricted. Typically, the business of the employer who proposes the non-competition provision is what determines the scope of restricted competition.
A non-solicitation agreement is one that prohibits an employee for soliciting or trying to gain the business of customers of his employer or former employer. Under the new Georgia law, these agreements are permissible and no geographic limitation or type of products or services must be stated in order to be enforceable, but these provisions are narrowly interpreted to apply only to those customers who the employee had “material contact” with during his employment and the products and services that are provided by the employer’s business.
The Georgia Restrictive Covenants Act does not apply to every non-compete or non-solicitation agreement, only those with a person who meets the definition of “employee” in the statute. However, for those agreements it applies to, the Act made several important changes to the law regarding non-compete and non-solicitation agreements. One important change was that courts were empowered to modify unreasonable limitations. Previously, limitations that were unreasonable were completely unenforceable. Now, for non-compete and non-solicit provisions that are covered by the Act, courts can modify them to make them reasonable and enforceable. This possibility makes effective representation and negotiation a must, and you can call on the experienced employment law attorneys at Hall & Lampros to help you deal with any restrictive covenants you are facing. Contact us today at 404-876-8100 or submit a confidential inquiry online for a free consultation to understand your rights and risk.