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Georgia Court of Appeals Curtails Enforceability of Employee Non-Solicitation Provisions: What Does This Mean for Your Business?

By: Morgan Harrison and Rick Mitchell

Submitted by Firm:
Arnall Golden Gregory LLP
Firm Contacts:
Edward Cadagin, Henry M. Perlowski, Teri A. Simmons
Article Type:
Legal Update

A recent decision by the Georgia Court of Appeals could have implications for your ability to enforce post-separation, employee non-solicitation covenants on your former employees.

Under the Georgia Restrictive Covenants Act (the “Act”), O.C.G.A. § 13-8-50 et seq., which governs non-competition and non-solicitation agreements for employees working in Georgia, a restrictive covenant is enforceable if it is “reasonable in time, geographic area, and the scope of prohibited activities.” O.C.G.A. § 13-8-­53(a). If a court finds that a restrictive covenant is unreasonable in time, geographic area, or scope, the Act permits the court to “blue pencil” — or modify — the provision and “grant only the relief reasonably necessary to protect such interest or interests and to achieve the original intent of the contracting parties to the extent possible.” O.C.G.A. § 13-8-54(b).

With respect to contracts that prohibit the solicitation of a company’s customers, the Act does not require any express reference to a geographic area to be enforceable. Instead, any reference to a prohibition against soliciting business from customers is deemed adequate and shall be narrowly construed to apply only to such customers with whom the employee had “material contact.” O.C.G.A. § 13-8-­53(b). As a result, for years, practitioners believed that a geographic limitation was not necessary for a contract that prohibits the solicitation of a company’s employees, so long as it only prohibited the solicitation of individuals with whom the former employee had material contact during his/her employment with the company.

However, in a recent decision, North American Senior Benefits, LLC v. Wimmer, 2023 WL 3963931 (Ga. Ct. App. June 13, 2023), the Georgia Court of Appeals held otherwise. Specifically, the court ruled that an employee non-solicitation covenant that failed to contain a geographic limitation was void and unenforceable under the Act, and the trial court did not have the authority to modify the restrictive covenant to add a geographic limitation. In its decision, the court observed that the Act provides only two exceptions to the requirement of a geographic limitation: restrictions on the solicitation of customers and the protection of trade secrets. As post-termination solicitation of employees is not one of the enumerated exceptions, it held that a geographic limitation is required under the Act. Moreover, the court held that the authority to “blue pencil” or modify a restrictive covenant under the Act is limited to striking offending language, noting that the “‘blue pencil’ marks, but it does not write.” Therefore, the trial court could not supply a missing term (i.e., a geographic area) to the covenant to make it enforceable.

What Does This Mean for Your Business?

Your company should review and evaluate its employee non-solicitation provisions to ensure that they contain a reasonable geographic limitation. If they do not, the covenants may not be enforceable under Georgia law, and we recommend that you have your employees sign a new, revised employee non-solicitation provision. AGG’s Employment Law team can assist with the review and, if necessary, revision of your restrictive covenants to ensure they are compliant with Georgia law.

If you have additional questions about this decision and how it may affect your business, please contact one of the members of our team.