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State Employment Law Articles
Report Link Dose of Sugar and Spice: Georgia Court Reminds Businesses How They Can Guard Against Unfair CompetitionFisher & Phillips, LLP - September 22, 2009 Georgia law has become somewhat notorious in the area of non-compete, non-solicit, non-recruitment, and confidentiality agreements - generally referred to as restrictive covenants. The nuisances from various court decisions over the years has made Georgia a tough, but not impossible, place to get restrictive covenants enforced. Report Link Georgia Supreme Court Rules on “Loyalty Covenants”.Elarbee, Thompson, Sapp & Wilson, LLP. - July 20, 2009 In a recent ruling, the Georgia Supreme Court held that "loyalty covenants," or clauses seeking to prohibit competitive activity by an employee or franchisee during the term of the employment or franchise relationship, are subject to the strict scrutiny standard of review. Atlanta Bread Co. Int’l, Inc. v. Lupton-Smith, No. S08G1815, __ S.E.2d ____ (Ga. June 29, 2009). Finding such clauses no different from non-competition clauses, the Court held that loyalty covenants must be reasonable in time, scope, and territorial limitation. Report Link Georgia Supreme Court Makes it Harder to Enforce Loyalty Covenants.Jackson Lewis LLP - July 15, 2009 Employers often seek to contractually prohibit their employees from engaging in other business activities during their employment, or at least to limit their competitive activities. The Georgia Supreme Court has held that such loyalty covenants are subject to the strict scrutiny standard of review, making them harder to enforce. Report Link Georgia Passes New Law That May Enhance Enforceability of Non-Compete Agreements.Jackson Lewis LLP - May 07, 2009 The Georgia legislature has passed a new law that makes employee restrictive covenants and non-compete agreements easier to enforce. While House Bill 173 has been signed by the governor, it will not go into effect unless the Georgia Constitution is amended in a statewide referendum in the 2010 general election. If implemented, Georgia will transition from a state where such agreements can be difficult to uphold to one where such agreements are regularly enforced, thus joining the majority. Report Link Noncompete News: HB 173: Potential Sea Change to Georgia's Noncompete Law.Ford & Harrison LLP - May 07, 2009 On April 29, 2009, Governor Sonny Perdue signed House Bill 173 (HB 173), to amend Georgia law relating to the enforcement of employment contracts that restrict or prohibit competition. HB 173 becomes effective only if Georgia's voting public passes a corresponding amendment to the Georgia Constitution, allowing for the Georgia legislature to propound the new law. Report Link Noncompete News: No Recovery of Compensation Tied to Unenforceable Noncompete.Ford & Harrison LLP - March 16, 2009 In this edition of Noncompete News, we tackle two issues under Georgia law: (a) whether an employer can recover compensation paid to its employee in return for a restrictive covenant that is held to be unenforceable; and (2) whether an employer can recover salary it paid its employee if the employee violates its fiduciary duty or duty of loyalty owed to his employer during his employment. The Georgia Court of Appeals had an opportunity to address both of these issues recently in the insurance brokerage context. Report Link Restrictive Covenant Developments in 2008.Elarbee, Thompson, Sapp & Wilson, LLP. - February 09, 2009 It is well known that Georgia and Texas are among the most difficult states in which to enforce a traditional non-compete agreement. Report Link Georgia Court Limits Non-Solicitation Agreements.Fisher & Phillips, LLP - April 17, 2008 A recent decision by the Georgia Court of Appeals concerning restrictive covenant agreements (such as non-compete agreements and non-solicitation of customer agreements), may make enforcement of even recently drafted agreements much more difficult. In light of this decision, it may be wise to consider revising your restrictive covenant agreements which apply to Georgia employees. Report Link Georgia Court of Appeals Reiterates Narrow Scope of Non-Solicitation Clauses.Ford & Harrison LLP - March 24, 2008 In a recent opinion, the Georgia Court of Appeals reversed a trial court’s decision to uphold the validity of non-solicitation and non-compete clauses in an employment agreement. The appellate court’s reversal of the trial court decision was premised on a strict reading of Georgia case law that delineates the permissible scope of non-solicitation clauses. Report Link Georgia Court Rules On Enforceability Of Non-Compete.Ogletree Deakins - October 22, 2007 The Georgia Court of Appeals recently held that a covenant not to compete included in an employment agreement was unenforceable because it failed to specifically identify the post-employment activities in which the former employee could not engage. The court ruled that another provision of the employment agreement prohibiting the employee from terminating her employment for one year was valid, however, even though the agreement also specified that her employment was at-will. Avion Systems, Inc. v. Thompson, No. A07A1488, Georgia Court of Appeals (July 10, 2007). Report Link Restrictive Covenant Developments in 2006 - Georgia & Texas.Elarbee, Thompson, Sapp & Wilson, LLP. - January 04, 2007 In 2005, two Eleventh Circuit Court of Appeals’ decisions validated a “race to the courthouse” approach in restrictive covenant litigation. As a result, employers seeking to enforce their restrictive covenants were confronted with additional strategic questions regarding the timing and venue of restrictive covenant litigation. In-house counsel were legitimately concerned about the possibility that in 2006 the courts would make it even more difficult for employers to protect their confidential information, customer relationships, and other proprietary interests. Surprisingly, 2006 brought some good news for employers in this arena. Even more surprising, however, were the sources of this good news – the Supreme Courts of Georgia and Texas. While neither venue is known for employer-friendly decisions in restrictive covenant litigation, they produced two significant victories for employers in 2006. Report Link Victory for Georgia Employers in Enforcing Non-Solicitation Covenants.Elarbee, Thompson, Sapp & Wilson, LLP. - June 06, 2006 In Palmer & Cay of Ga., Inc. v. Lockton Companies, Inc., the Supreme Court of Georgia recently held that a non-solicitation of customers provision is enforceable even though it is not limited to customers served by the employee within a specific time period prior to the employee’s termination. Report Link Georgia Supreme Court Clarifies Standard for Nonsolicitation of Customers AgreementsFord & Harrison LLP - May 31, 2006 The Georgia Supreme Court has held that a nonsolicitation of customers provision in an employment agreement is not required to be limited to solicitation of customers served within a specific period of time before the employee's termination to be enforceable. The Court's decision in this case represents a departure from a line of recent cases that have refused to enforce nonsolicitation of customers provisions unless they are limited for a period of time before termination of employment (for example prohibit the employee from soliciting customers served during the two years preceding termination). Report Link Racing to the court house over non-competes (pdf).Littler Mendelson, P.C. - December 14, 2005 On November 15, 2005, the 11th Circuit Court of Appeals in Manuel vs. Convergys ruled in favor of plaintiff, who had filed a declaratory judgment that his NCA was unenforceable under Georgia law. Plaintiff had accepted work in Georgia, resigned, then signed a lease and brought his action against his former employer - all within the space of 15 days. The court dismissing the employer's counterclaim of trade secret violations, applying employee-friendly Georgia law. Benson summarizes this latest development and provides recommendations for steps employers can take to protect themselves.
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