In a recent decision, the Georgia Court of Appeals clarified two key issues under Georgia's Restrictive Covenants Act.
- Whether a provision restricting the solicitation, recruitment or hiring of a company's employees must have a territory; and
- Whether the authority to "modify" a covenant allows a court to add terms that are not present or whether the courts are limited to striking language that renders the covenant overbroad.
More specifically, in North American Senior Benefits, LLC v. Wimmer, 2023 WL 3963931 (Ga. App. June 13, 2023), the Georgia Court of Appeals has held that non-recruitment and no-hire covenants require a territory to be enforceable. While some trial courts had previously found this to be the case, this is the first appellate decision on this issue. Employers should review and revise their restrictive covenant agreements to ensure compliance with the law or risk their covenants being found unenforceable.
In the same decision, the Court of Appeals held that courts can "blue-pencil" overbroad covenants by striking offending language, but cannot write in terms where none exist. For example, courts cannot write in a territory where no territory is present in the agreement. This is also a key clarification of Georgia noncompete law.
We will provide more details regarding the decision and its implications shortly.
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