Non-compete and non-solicitation agreements are complex documents, and their enforceability may vary based on jurisdiction and other factors. Before signing, it’s advisable to seek legal advice to ensure you fully understand the agreement’s implications, which might significantly restrict your ability to work in a specific industry or geographic location should you leave your current job. Therefore, understanding the terms helps ensure that you are aware of the potential limitations the agreement places on your future career choices and your options for challenging such agreements.
What is a non-compete agreement?
A non-compete agreement (NCA), or a covenant not to compete is a contract entered into by an employer and an employee that restricts the employee from engaging in competitive activities, typically within a specific geographic area and for a certain period both during and after the termination of employment.
Non-compete agreements are common in industries where employees can access sensitive information, trade secrets, or client relationships or have received extensive training for specific roles. Breaching the terms of a non-compete agreement may result in legal action, injunctive relief, financial penalties, or reputational damage. Knowing the potential consequences helps you make informed decisions about your career moves.
What is a non-solicitation agreement?
A non-solicitation agreement is a restrictive covenant contained in a legal contract between an employer and an employee or between businesses that restrict the individual or entity from actively soliciting or attempting to attract away customers, clients, employees, or other business relationships from a company.
There are several types of non-solicitation agreements, including:
- Employee non-solicitation agreements: A company may require employees to sign non-solicitation agreements to prevent them from soliciting clients or colleagues should they leave the company.
- Customer/client non-solicitation agreements: Businesses may enter into agreements with clients or customers that prevent them from actively soliciting the company’s employees.
- Vendor/supplier non-solicitation agreements: Companies may have agreements with vendors or suppliers to keep them from actively soliciting business from the company’s clients or customers.
Non-solicitation agreements typically outline specific actions that are prohibited, specify the duration the restrictions are in effect (the period must be limited and reasonable to be enforceable) and describe the various relationships the agreement pertains to.
Challenging the enforceability of non-compete and non-solicitation agreements
The enforceability of a non-compete or non-solicitation agreement can be challenged in Georgia, and the outcome will depend on various factors, including the specific terms of the agreement, the circumstances surrounding its creation, and the applicable laws. Courts generally scrutinize these agreements to ensure they are reasonable in scope, duration, and geographic limitations. If the restrictions are deemed overly broad or unreasonable, a court may choose to limit the enforceability of the agreement or otherwise modify the agreement.
Here are some common grounds on which the enforceability of non-compete or non-solicitation agreements can be challenged in Georgia:
- Reasonableness: Georgia courts typically assess the reasonableness of a non-compete or non-solicitation agreement by considering the duration of the restriction, the geographic scope, and the specific activities or industries covered by the agreement.
- Legitimate business interest: Non-compete and non-solicitation agreements in Georgia are more likely to be enforceable if they are designed to protect legitimate business interests such as trade secrets, confidential information, customer relationships, or specialized training provided to certain employees.
- Judicial Modification: Georgia law allows a court to modify an overly broad non-compete or non-solicitation agreement to make it reasonable and enforceable. If the agreement is so overly broad that it cannot be reasonably narrowed, a court may decline to enforce it; however, it cannot rewrite the contract to create terms that were not originally agreed upon by the parties.
- Unconscionability: If the terms of the agreement are considered unconscionable—meaning extremely one-sided or oppressive—a court might decline to enforce it.
- Violation of public policy. Courts sometimes refrain from enforcing agreements that violate public policy, e.g., an agreement that unreasonably limits an individual’s ability to earn a living might be regarded as unenforceable.
Georgia law regarding non-compete and non-solicitation agreements can be complicated and is continually evolving. Therefore, if you are considering the enforceability and scope of such an agreement and need guidance on navigating these issues, consulting with a Georgia attorney experienced in non-compete and non-solicitation agreements is advisable.
You should approach any agreement that looks like it contains non-compete or non-solicitation restrictions with caution. Georgia courts frequently enforce these agreements as written unless the time, geographic, or other applicable restrictions are considered overly broad. If you breach one of these agreements, the employer could bring a lawsuit against you to enforce the agreement and seek damages and other relief from you. Even if you ultimately prevail, such disputes can be a serious drain on your time and resources.
The employment attorneys at Buckley Bala Wilson Mew LLP have years of experience with non-compete and non-solicitation agreements and will make sure your rights are fully protected. If you are considering challenging such an agreement in Atlanta, call us or fill out our contact form to schedule an initial consultation today.