In an effort to protect their business, many employers ask their employees to sign a non-compete agreement at the beginning of the employment relationship. Non-compete agreements state that for a period of time after the employee leaves the company, the employee cannot work for a competitor. Because Georgia courts view non-compete agreements as being a restriction on the employee’s ability to earn a living, the non-compete agreement must be limited in both time and scope.
For example, assume Pete is a manager of ABC Wood Floors in Alpharetta, where they specialize in wood floors, and do not sell any other flooring products. If, upon being hired, Pete signed a non-compete agreement that stated for a period of 12 months after his termination from ABC Wood Floors he cannot work for any other wood flooring company in Alpharetta, a court would most likely deem that non-compete agreement to be enforceable. If, however, the non-compete agreement stated that for a period of 24 months after his termination, Pete could not work for any flooring company in Georgia, the agreement would most likely be deemed unenforceable.
In making this determination, a court would look to the length of the non-compete, the geographical territory covered, and that it is not limited to wood flooring companies, but rather encompasses all flooring companies. In order for a non-compete agreement to be valid in this situation, it should be limited to wood flooring companies, and the territorial restriction must be narrower, such as a radius of 10 miles. In addition, the geographical territory should not encompass areas where the company does not do business. If ABC Wood Floors does not do business outside of metro Atlanta, the non-compete agreement should not cover areas outside metro Atlanta.
And although judges are now allowed to “blue-pencil” non-compete agreements, which means they have the ability to modify the restrictions of the non-compete agreement, they are reluctant to do so. As a result, it is very important to review the terms of the non-compete agreement when trying to determine if it would be considered enforceable.