Introduction
Decision
Comment


Introduction

Prior to the enactment of Georgia's Restrictive Covenant Act (RCA) in May 2011, the Georgia courts uniformly held void and unenforceable "in any capacity" non-compete provisions in the employer-employee context. "In any capacity" non-compete provisions prohibit an employee from working for a competitor in any capacity and are not limited to the types of duties that the employee performed for their current employer. Under Georgia's prior common law, a court was not allowed to revise an otherwise void and unenforceable provision to render it enforceable.

Under the RCA, however, the court is expressly allowed – but not required – to "modify" an overbroad non-compete provision to render it enforceable. There have been some cases since the enactment of the RCA that have attempted to define what "modify" means under the RCA.

Decision

Against this backdrop, in December 2022, in AmSpec, LLC v Calhoun et al, a federal court in the Southern District of Georgia addressed a non-compete provision that stated, among other things, that the employee could not "as an employee, employer, owner, operator" work for "an entity engaged in the same or similar business as AmSpec" where they "contribute[d their] knowledge" to that competitive company.

After a lengthy discussion of what "contributing [their] knowledge" meant, the court moved to "the janitor rule" – namely, the employee's argument that the provision, as drafted, prohibited the employee "from working in any capacity [for a competitor] . . . even if the work is not competitive with [AmSpec's] business – including, for example, working as a secretary or janitor". The court agreed that it was an "in any capacity" non-compete provision.

Relying on a 2022 Georgia Court of Appeals decision, Burbach v Motorsports of Conyers, LLC, the AmSpec court then held that "in any capacity" non-compete provisions are void and unenforceable. The court then exercised its discretion to decline to modify the agreement to make it enforceable. In doing so, it reasoned that AmSpec did not offer a narrower interpretation of the non-compete provision that would narrow it to prohibit the employee from performing similar services to those they performed on behalf of AmSpec, and, thus, it would not offer narrower language for AmSpec.

Comment

The Burbach decision (on which the AmSpec judgment relied) adhered to Georgia common law that preceded the RCA's enactment. On 20 December 2022, the Georgia Supreme Court agreed to hear an appeal of the Burbach decision.

Under AmSpec and Burbach – at least while it is being appealed – companies would be wise to review their Georgia restrictive covenant agreements and ensure that any non-compete provisions contain, among other things, a limitation on the types of duties that an employee is prohibited from performing on behalf of a competitor.

For further information on this topic please contact Jeffrey Mokotoff at FordHarrison ​by email ([email protected]). The FordHarrison website can be accessed at www.fordharrison.com