Articles Discussing Restrictive Covenants In Georgia.

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.)

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.

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).