Executive Summary: The Eleventh Circuit recently addressed one of the most confusing questions surrounding Georgia’s new Restrictive Covenant Act (RCA): did the law become effective on November 3, 2011, as the General Assembly intended, or did it become effective May 11, 2011, when the legislature reenacted the statute? In answer to this question, the Eleventh Circuit held unequivocally that the new law did not become effective until May 11, 2011. Accordingly, Georgia’s pre-existing law governing restrictive covenants applies to all non-compete agreements signed during the “gap period” between November 3, 2010 and May 11, 2011.
Articles Discussing Restrictive Covenants In Georgia.
Georgia Governor Signs Sweeping Immigration Bill
Fulfilling a campaign promise, Georgia Governor Nathan Deal has signed into law a sweeping immigration bill that will affect companies in Georgia that employ more than 10 full-time employees. The law, HB87, requires companies to register with the federal E-Verify program and check the legal status of new hires. It also creates the offense of “aggravated identity theft†for the use of false information. In addition, it allows the police to question individuals about their immigration status and mandates sanctions for those who harbor or transport undocumented migrants.
The Second Time is the Charm: Georgia Governor Signs New Restrictive Covenant Law
Last November, voters in Georgia approved a constitutional amendment to allow a new restrictive covenant law to take effect. There were several uncertainties regarding the enforcement and application of the new law. When the Georgia legislature opened in January 2011, new restrictive covenant legislation was introduced to fix these problems. That legislation was passed by the House and the Senate, and signed by Governor Nathan Deal on May 11, 2011. It governs restrictive covenant agreements signed after that date. An updated summary of the new law follows.
Debate Brewing on Effective Date of Georgia’s New Non-Compete Law.
Even though Georgia’s voter-approved constitutional amendment for a sweeping new restrictive covenant law said it would take effect upon ratification, a debate has been developing in the state over whether that is the effective date. (For more information on the new law, see our article, Georgia Voters Approve New, Employer-Friendly Non-Compete Law.)
Georgia Voters Approve New, Employer-Friendly Non-Compete Law
This Election Day, joining the majority of states, Georgia became a state where restrictive covenants should be regularly enforced. Voters in Georgia approved a constitutional amendment permitting a new restrictive covenant law to take effect immediately. The new law is a sweeping change for the state. For the first time, Georgia has a law that identifies specific language necessary for enforceability, identifies the types of individuals and entities that can be parties to covenants, allows courts to “blue pencil” covenants, creates an undue hardship exception to the enforcement of covenants, and removes time restrictions on the protection of confidential information.
Federal Appeals Court Upholds Broad Non-competition Covenant Signed in Sale of a Business in Georgia
While Georgia’s appellate courts generally disapprove of restrictive covenant agreements, the Eleventh Circuit Court of Appeals has reminded potential business buyers that Georgia courts will enforce broad restrictive covenant agreements when they are entered into ancillary to the sale of a business. Mohr et al. v. BNY Mellon, No. 10-11890 (11th Cir. 2010).