Non-compete clauses protect businesses when they lose employees who may go on to participate in business activities that create new competition.
Preventing employees from competing with their former employers or soliciting their customers is a necessity in many industries.
Employers and employees must understand how Georgia’s non-compete statute applies to their businesses. This ensures that agreements between the parties are enforced properly and prevents the confusion that can lead to costly litigation.
Enforcing Non-Compete Agreements
Non-compete agreements (NCAs) restrict employees from establishing a similar business as their current or former employer’s business. This restriction typically applies to a particular geographic location, the type of work, and period of time. Non-compete agreements are often implemented at the start of an individual’s employment. Using a non-compete agreement prevents information related to your business, its products and services, and your customers from being used by a new or existing competitor.
When employees breach a non-compete agreement, they can put their industry reputation and future employment at risk.
Employees of small and midsize organizations are often asked to sign a non-compete agreement. This is especially true with startup companies whose success relies on the information and data related to their businesses.
Under Georgia law, a company may file a legal claim against individuals who breach a non-compete agreement and recover the revenue that may have been lost as a result of that breach.
Non-compete agreements are enforceable under Georgia law if they’re deemed reasonable and include the essential elements of all non-compete contracts.
Elements of a Non-Compete Agreement
An enforceable non-compete agreement must include details related to time, scope, and geography.
The time limit related to an NCA will vary. It can range from 6 months to 10 years. However, a significantly extended period of time may be seen as unreasonably limiting to an individual’s livelihood and, therefore, unenforceable by a court.
This is important to consider, as an NCA may be voided if any part of the agreement is considered unenforceable. The scope of a non-disclosure agreement is essential to its enforceability under Georgia law. Your use of language must be considered, as contracts that limit an employee’s activity “in any capacity” can be too restrictive and, again, prevent an NCA from being enforced. Non-compete contracts must include details related to geography, which limit an employee’s ability to compete within a certain location.
In order to be enforced, an NCA must provide information related to the geographic area in which a person cannot participate in a business that competes with their existing or former employer.
Understanding Non-Solicitation Clauses
Non-solicitation clauses provide additional protection to employers alongside non-compete agreements. This clause limits an employee’s ability to solicit any customers or employees of their former employer. Employees often have contact with customers and gain knowledge about their purchasing history and behaviors, especially those in a sales-related role. A non-solicitation agreement protects the employer from individuals who may use those contacts to their competitive advantage but to the detriment of the employer.
Employees often have contact with customers and gain knowledge about their purchasing history and behaviors, especially those in a sales-related role. A non-solicitation agreement protects the employer from individuals who may use those contacts to their competitive advantage but to the detriment of the employer.
Non-solicitation clauses may be specific to a given period of time, and the laws related to its enforcement can vary depending on your location.These clauses are typically enforced when they prevent employees from gaining business from the customers with whom they had
These clauses are typically enforced when they prevent employees from gaining business from the customers with whom they had a material contact in a previous organization. Non-compete and non-solicitation agreements provide a high level of protection to today’s businesses.
Although laws vary between locations, Georgia courts enforce non-compete agreements that are reasonable and contain the necessary elements related to time, scope, and geography. Understanding non-compete and non-solicitation clauses allow you to properly implement them and ensure that they are enforced for your protection.