Georgia: Restrictive Covenant Must be Enforceable Under Georgia Law for Foreign Choice-of-Law Provisions
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APPLIES TO All Employers with Employees in GA |
EFFECTIVE September 6, 2023
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QUESTIONS? Contact HR On-Call |
Quick Look
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Discussion
In Motorsports of Conyers, LLC v. Burbach, the Georgia Supreme Court ruled a restrictive covenant must be enforceable under Georgia law before applying a foreign choice-of-law provision. Here, two motorcycle dealerships sought to enforce a restrictive covenant against a former employee under Florida law. A Florida choice-of-law provision governed the employment contracts containing the restrictive covenants. In its ruling, the Georgia Supreme Court found that applying the Georgia Restrictive Covenant Act (GRCA) is the first step in deciding whether a public policy exception overrides a foreign choice-of-law provision.
The GRCA codified case law distinguishing between restrictive covenants that are reasonable and unreasonable. Reasonable restrictive covenants are those that have limitations on scope, duration, and geographic reach. Contracts that do not have such restrictions are a restraint of trade and contrary to public policy. The GRCA allows courts to blue-pencil such unreasonable restrictive covenants to allow them to be enforced in part under Georgia law. As such, the Court returned the case to the trial court to first apply the GRCA framework prior to determining whether the foreign choice-of-law provision applies. Employers hoping to enforce a foreign choice-of-law provision in Georgia courts should consult with legal counsel first.
Action Items
- Consult with legal counsel to determine enforceability of restrictive covenants.
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