Employee Non-Compete Agreement and Enforceability Memo — Georgia

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GEORGIA Employee Non-Compete Agreement and Enforceability Memo

Quick-Reference Summary

PART A — ENFORCEABILITY MEMO

A.1 Statutory Framework

The Georgia Restrictive Covenants Act (GRCA), O.C.G.A. § 13-8-50 through § 13-8-59, governs all restrictive covenants entered into on or after May 11, 2011. Pre-Act covenants remain subject to prior Georgia case law, under which restrictive covenants were strictly construed and not subject to blue-penciling in the employment context.

The GRCA was enabled by a 2010 amendment to the Georgia Constitution (Ga. Const. Art. III, § VI, ¶ V(c)) that authorizes the General Assembly to permit restrictive covenants in defined commercial relationships.

A.2 Who May Be Bound — Employee Coverage (O.C.G.A. § 13-8-53(a))

Post-employment non-competes are enforceable only against employees who fit one of these categories:

Employees outside these four categories are statutorily excluded from post-employment non-competes. Customer and employee non-solicitation covenants and confidentiality covenants are evaluated more flexibly.

A.3 Reasonableness Standards (O.C.G.A. § 13-8-53)

A non-compete is enforceable if reasonable in (i) time, (ii) geographic area, and (iii) scope of prohibited activities. The GRCA provides:

Time — Presumptive Reasonableness (§ 13-8-57)

Geographic Area (§ 13-8-53(c))

A description is sufficient if it provides "fair notice of the maximum reasonable scope of the restraint." Acceptable descriptions include:

• A list of counties, states, or regions;
• A radius from a designated location;
• A reference to the territory in which the employee worked;
• A reference to the territory in which the Company conducts business and the employee had material responsibility.

The descriptor does not require precise metes and bounds.

Scope of Activity (§ 13-8-53)

Limited to the prohibited products, services, or activities materially competitive with the employer's business and tied to the employee's role.

A.4 Customer Non-Solicitation (O.C.G.A. § 13-8-53(b))

Customer non-solicit covenants are enforceable without an express geographic limit if the description of prohibited activities, customers, or services provides fair notice. Typically tied to:

• Customers with whom employee had material contact during the last 12–24 months;
• Customers whose confidential information employee accessed; and/or
• Active customers as of termination.

A.5 Employee Non-Solicitation — Wimmer (2024)

In North American Senior Benefits, LLC v. Wimmer, ___ Ga. ___ (2024), the Georgia Supreme Court clarified that an employee non-solicit covenant need not contain an express geographic limit so long as the scope is otherwise reasonable under the GRCA. This resolved a long-running split with prior appellate decisions.

A.6 Modification / Blue-Pencil Authority (O.C.G.A. § 13-8-53(d))

Under the GRCA, in any action to enforce a restrictive covenant, the court "shall enforce" the covenant as written, but where a covenant is overbroad, the court "shall modify" it to render it reasonable. Key limits:

• Modification cannot make the covenant more restrictive than written.
• Modification is available even where the parties did not expressly authorize it.
• Modification applies to time, geography, and scope of activity.

This is a fundamental departure from pre-GRCA Georgia law, which prohibited blue-penciling of employment covenants and routinely voided overbroad agreements in their entirety.

A.7 Consideration

Initial employment is adequate consideration. For mid-employment covenants, continued employment is adequate consideration under Georgia common law (W.R. Grace & Co. v. Mouyal, 262 Ga. 464 (1992)), though additional consideration is strongly recommended (raise, bonus, equity, promotion, severance commitment).

A.8 Industry-Specific Considerations

• Lawyers: Ga. R. Prof. Conduct 5.6 prohibits non-competes restricting practice of law (other than retirement agreements).
• Physicians: Generally enforceable under GRCA but subject to public-interest scrutiny and reasonableness review; see Beckman v. Atlanta Pulmonary Med. Clinic and similar cases.
• Broadcasters: No special statute; GRCA standards apply.
• Franchisees/distributors: Separately addressed in §§ 13-8-53, 13-8-57.

A.9 Trade Secret Overlay

Independent of the GRCA, the Georgia Trade Secrets Act (O.C.G.A. § 10-1-760 et seq.) protects trade secrets. A breach claim under restrictive covenants may be supplemented by a trade-secret misappropriation claim where the conduct involves protected information.

A.10 Remedies (O.C.G.A. § 13-8-53(d), 13-8-58)

• Injunctive relief — primary employer remedy.
• Compensatory damages — including lost profits and consequential damages.
• Attorney's fees — recoverable where contract or statute provides; the GRCA does not impose one-way fee-shifting.
• Liquidated damages — enforceable if not a penalty (Liberty Life Ins. Co. v. Thomas B. Hartley Constr. Co., 258 Ga. 808 (1989)).

A.11 Choice of Law

Georgia courts generally honor reasonable choice-of-law clauses. However, where the employee primarily works in Georgia and was hired in Georgia, Georgia courts will typically apply GRCA standards under public-policy principles (Convergys Corp. v. Keener, 276 Ga. 808 (2003), pre-GRCA, articulated the public-policy override).

A.12 Recent Developments

• North American Senior Benefits, LLC v. Wimmer, ___ Ga. ___ (2024) — employee non-solicit need not have express geographic limit.
• Belt Power LLC v. Reed, 354 Ga. App. 289 (2020) — application of modification authority.
• FTC Non-Compete Rule set aside in Ryan, LLC v. FTC (N.D. Tex. Aug. 20, 2024); appeal pending.
• Georgia legislature periodically reviews GRCA amendments; monitor 2025–2026 sessions.

PART B — NON-COMPETE AGREEMENT

B.1 Caption

Effective Date: [__/__/____]

B.2 Recitals

WHEREAS, the Company is engaged in [DESCRIBE BUSINESS] within Georgia and other jurisdictions and has invested substantial resources in developing confidential information, customer relationships, goodwill, and specialized training;

WHEREAS, Employee will serve the Company in a role that involves [☐ regularly soliciting customers / ☐ making sales / ☐ managing the enterprise or a department and directing two or more employees / ☐ access to specialized skills, customer contacts, customer information, or confidential information], thereby qualifying Employee as a covered employee under O.C.G.A. § 13-8-53(a);

WHEREAS, this Agreement is entered into on or after May 11, 2011 and is intended to be enforced under the Georgia Restrictive Covenants Act, O.C.G.A. § 13-8-50 et seq.;

NOW, THEREFORE, in consideration of the mutual covenants below and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows.

B.3 Definitions

"Business of the Company" means [DESCRIBE WITH SPECIFICITY].

"Competing Business" means any person or entity that engages in the Business of the Company within the Restricted Territory.

"Confidential Information" means non-public information of the Company including [LIST], and includes "trade secrets" as defined in O.C.G.A. § 10-1-761(4).

"Customer" means any person or entity to which the Company sold, marketed, or provided products or services during the [12 / 18 / 24] months preceding Employee's termination, and any prospective customer with whom Employee had material contact during that period.

"Material Contact" has the meaning provided in O.C.G.A. § 13-8-51(10) — i.e., contact between Employee and a Customer (i) with whom Employee dealt on behalf of the Company; (ii) whose dealings with the Company were coordinated or supervised by Employee; (iii) about whom Employee obtained Confidential Information; or (iv) who receives products or services from which Employee receives compensation, commissions, or earnings.

"Restricted Period" means [12 / 18 / 24] months following Employee's termination (presumptive reasonable maximum: 2 years per O.C.G.A. § 13-8-57(a)).

"Restricted Territory" means [SELECT ONE]:

☐ The counties of [LIST] in Georgia;
☐ A [___]-mile radius from each Company office at which Employee worked;
☐ The territory in which Employee performed services or had Material Contact with Customers during the last [12 / 24] months of employment.

B.4 Acknowledgments — Coverage Under O.C.G.A. § 13-8-53(a)

Employee acknowledges and warrants that Employee qualifies as a covered employee under O.C.G.A. § 13-8-53(a) because Employee (check all that apply):

☐ Customarily and regularly solicits Customers or prospective Customers for the Company;
☐ Customarily and regularly engages in making sales or obtaining orders or contracts;
☐ Has a primary duty of managing the enterprise (or a department/subdivision), customarily and regularly directs the work of two or more other employees, and has authority to hire or fire (or significant input);
☐ Possesses selective or specialized skills, learning, abilities, customer contacts, customer information, or confidential information obtained by reason of employment with the Company.

B.5 Non-Compete

During the Restricted Period, Employee shall not, directly or indirectly, within the Restricted Territory:

(a) own, manage, operate, control, be employed by, consult for, or provide services to any Competing Business in a capacity in which Employee would (i) perform the same or substantially similar duties as Employee performed for the Company, or (ii) use or disclose Confidential Information; or

(b) engage in any business activity competitive with the Business of the Company in the capacity described in subsection (a).

Carve-out: Passive ownership of less than 2% of a publicly traded entity is permitted.

B.6 Non-Solicitation of Customers (O.C.G.A. § 13-8-53(b))

During the Restricted Period, Employee shall not, directly or indirectly, solicit, divert, or accept business from any Customer with whom Employee had Material Contact during the last 24 months of employment, for the purpose of providing products or services competitive with the Business of the Company.

Pursuant to O.C.G.A. § 13-8-53(b), this Section need not be limited to a specific geographic area because the scope is defined by reference to identified Customers and competitive activities.

B.7 Non-Solicitation of Employees

During the Restricted Period, Employee shall not, directly or indirectly, solicit for employment, hire, or attempt to hire any person employed by the Company during the last 12 months of Employee's employment, other than through a general public advertisement not targeted at Company employees. Pursuant to North American Senior Benefits, LLC v. Wimmer, ___ Ga. ___ (2024), this restriction does not require an express geographic limit.

B.8 Confidentiality

Employee shall not, during or after employment, use or disclose Confidential Information except for the benefit of the Company. This Section is enforceable independent of and is not limited by the Restricted Period. Trade-secret protection under the Georgia Trade Secrets Act, O.C.G.A. § 10-1-760 et seq., shall continue indefinitely.

B.9 Consideration

In consideration for Employee's covenants, the Company shall provide (check all that apply):

☐ Initial employment with the Company effective [__/__/____]
☐ Sign-on bonus of $[____________]
☐ Promotion to [POSITION] effective [__/__/____]
☐ Salary increase of $[____________] effective [__/__/____]
☐ Equity grant of [___] [shares/RSUs/units] under the Company's [PLAN NAME]
☐ Severance commitment of [___] months base salary payable upon termination without Cause
☐ Continued at-will employment
☐ Other: [____________]

B.10 Garden Leave (Optional)

☐ Employee shall provide [___] days' written notice of resignation. The Company may, in its discretion, place Employee on paid garden leave during the notice period, during which Employee shall remain an employee, continue to receive base salary and benefits, and shall not work for any other entity. Time on garden leave reduces the Restricted Period day-for-day.

B.11 Remedies

(a) Injunctive Relief. Employee acknowledges that breach would cause irreparable harm and that the Company is entitled to seek temporary, preliminary, and permanent injunctive relief, including under the Georgia Trade Secrets Act.

(b) Damages. The Company may seek monetary damages, including lost profits and disgorgement.

(c) Tolling. The Restricted Period shall be tolled during any period of breach.

(d) Attorney's Fees. In any action to enforce this Agreement, the prevailing party shall recover reasonable attorney's fees and costs.

B.12 Reformation / Blue-Pencil (O.C.G.A. § 13-8-53(d))

If any provision of this Agreement is found by a court of competent jurisdiction to be overbroad or otherwise unenforceable, the parties expressly request that the court modify the provision to the minimum extent necessary to render it enforceable, consistent with O.C.G.A. § 13-8-53(d). The parties stipulate that the court may "blue-pencil" or judicially modify time, geography, and scope of activity, provided that no modification shall make the covenant more restrictive than written.

B.13 Choice of Law and Venue

This Agreement is governed by the laws of the State of Georgia without regard to conflict-of-laws principles. The parties consent to exclusive venue in the Superior Court of [____________] County, Georgia, or the U.S. District Court for the [Northern/Middle/Southern] District of Georgia.

B.14 Severability and Entire Agreement

The provisions of this Agreement are severable. This Agreement, together with [LIST RELATED AGREEMENTS], constitutes the entire agreement between the parties on the subject matter and supersedes all prior negotiations and understandings.

B.15 Signatures

PART C — PRE-SIGNING CHECKLIST

C.1 Coverage Audit (O.C.G.A. § 13-8-53(a))

☐ Confirm Employee fits one of the four statutory categories (sales-facing, management, key employee/professional)
☐ Document Employee's specific role and duties supporting coverage
☐ If Employee is "ordinary" (none of the four categories), DO NOT use a post-employment non-compete; consider only confidentiality and customer non-solicit

C.2 Drafting Reasonableness

☐ Restricted Period ≤ 2 years (presumptively reasonable under § 13-8-57(a))
☐ Restricted Territory described by counties, radius, or territory employee worked
☐ Scope of activity limited to competitive products/services tied to employee's role
☐ Customer non-solicit references Material Contact under § 13-8-51(10)
☐ Employee non-solicit does not require geographic limit (per Wimmer)

C.3 GRCA Compliance

☐ Agreement is in writing and signed by Employee (§ 13-8-53(a))
☐ Agreement entered into on or after May 11, 2011 (GRCA applies)
☐ Reformation clause expressly invokes O.C.G.A. § 13-8-53(d)
☐ Choice-of-law clause designates Georgia (or another state with reasonable nexus)

C.4 Consideration

☐ Identify and document the specific consideration (initial employment, raise, bonus, equity, promotion, severance)
☐ Recital ties consideration to the covenant

C.5 Industry-Specific

☐ If Employee is a lawyer: do NOT use a practice-restricting non-compete (Ga. R. Prof. Conduct 5.6)
☐ If Employee is a physician: tailor narrowly; consider public-interest review
☐ If Employee handles trade secrets: ensure separate confidentiality protections under O.C.G.A. § 10-1-760 et seq.
☐ If sale-of-business: use 5-year presumption (§ 13-8-57(c)) and broader geography

C.6 Documentation and Exit

☐ Retain executed agreement and consideration evidence
☐ Issue reminder of obligations at termination
☐ Document any waiver or modification in writing
☐ Confirm forwarding address for notices

SOURCES AND REFERENCES

• Georgia Restrictive Covenants Act, O.C.G.A. § 13-8-50 to § 13-8-59: https://law.justia.com/codes/georgia/title-13/chapter-8/article-4/
• O.C.G.A. § 13-8-53 (employee coverage, modification authority): https://law.justia.com/codes/georgia/title-13/chapter-8/article-4/section-13-8-53/
• O.C.G.A. § 13-8-57 (presumptive durations): https://law.justia.com/codes/georgia/title-13/chapter-8/article-4/section-13-8-57/
• Ga. Const. Art. III, § VI, ¶ V(c) (constitutional amendment): https://ballotpedia.org/Georgia_Restrictive_Covenants_Amendment,Amendment_1(2010)
• North American Senior Benefits, LLC v. Wimmer, ___ Ga. ___ (2024): https://www.gasupreme.us/wp-content/uploads/2024/02/s23g0152.pdf
• W.R. Grace & Co. v. Mouyal, 262 Ga. 464 (1992)
• Belt Power LLC v. Reed, 354 Ga. App. 289 (2020)
• Georgia Trade Secrets Act, O.C.G.A. § 10-1-760 et seq.: https://law.justia.com/codes/georgia/title-10/chapter-1/article-27/
• Ga. R. Prof. Conduct 5.6: https://www.gabar.org/Handbook/index.cfm
• Georgia Attorney General: https://law.georgia.gov/
• Georgia Department of Labor: https://dol.georgia.gov/