Georgia: Non-Solicitation Agreements Must Include Geographic Limitation
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APPLIES TO All Employers with GA Employees |
EFFECTIVE June 12, 2023
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QUESTIONS? Contact HR On-Call |
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Discussion
In North American Senior Benefits, LLC v. Wimmer, the Georgia Court of Appeals clarified that an employee non-solicitation agreement must contain an express geographic limitation to be enforceable. Here, an insurance marketing company sued two former independent agents for violating their agent contracts. The contracts prohibited the agents from soliciting any employee, agent, or independent contractors of the company for two years after the termination of their contract. The plaintiff company alleged the former agents were poaching its employees and sued for breach of the agent contracts.
The Georgia Restrictive Covenants Act (Act) requires restrictive covenants to be reasonable in time, geographic area, and scope of prohibited activities. Although trial courts in Georgia interpret this language to apply to non-solicitation agreements, this is the first time the issue has been addressed at the appellate level. The court agreed with the trial court that the agent contracts did not contain a geographic limitation to the non-solicitation provision and therefore was not enforceable. The court also refused to “blue pencil” the provision since doing so would materially alter the restriction rather than narrowing it or removing impermissible language. The ruling is being appealed but, for now, employers should consider including a geographic limitation to help enforcement of non-solicitation provisions in the interim.
Action Items
- Review and revise non-solicitation provisions with legal counsel.
- Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase