On November 2, 2010, Georgia voters approved an amendment to the Georgia Constitution that, absent a successful challenge to the validity of its enactment, will dramatically change Georgia law on restrictive covenants.
On November 2, 2010, Georgia voters may make it easier for employers to enforce restrictive covenants.
In a state that is otherwise generally recognized as being "employer friendly," Georgia law has long been known for its "unfriendliness" towards non-competes and other post-employment restrictive covenants.
If eventually passed, proposed Georgia House Bill 173 will dramatically alter Georgia restrictive covenant law as we now know it.
In Atlanta Bread Company International, Inc., v. Lupton-Smith, 285 Ga. 587 (Ga. 2009), the Georgia Supreme Court held that covenants restricting a franchisee’s business activities during the life of the franchise agreement (“in-term” restrictive covenants) are unenforceable if not reasonably limited in time, territorial region, and scope.
The Georgia Supreme Court recently ruled that under Georgia procurement laws, vendors who decide to challenge a contract award must file an administrative protest within 10 calendar days or lose their day in court.
In Atlanta Bread Co. Int’l, Inc. v. Lupton-Smith, S08G1815, 2009 WL 1834215 (Ga. Jun. 29, 2009), the Georgia Supreme Court held that a non-compete provision that covers a franchisee during the term of a franchise agreement (an “in-term non-compete”) is subject to the same strict scrutiny as a non-compete provision that applies after the end of the relationship (a “post-term non-compete”).
Since the Georgia Supreme Court’s 1992 decision in W.R. Grace v. Mouyal, it has been well established in Georgia that customer non-solicitation covenants do not need to be limited to any particular geographic territory, provided that the covenant only prohibits solicitation of customers with whom the former employee had contact.
A non-solicitation of customer clause is a common form of restrictive covenant used in employment, distributorship, franchise, and other types of commercial contracts.