All Things Newz
Law \ Legal

Restrictive Covenants: Is Your Noncompete Unenforecable? – Employee Rights/ Labour Relations



To print this article, all you need is to be registered or login on Mondaq.com.

On March 10, 2022, the Georgia Court of Appeals issued a
decision regarding the enforceability of certain restrictive
covenants in an employment agreement. In Burbach v. Motorsports
of Conyers, LLC
, 2022 WL 712481 (March 10, 2022), the Court of
Appeals first determined that a Florida choice of law provision in
the applicable agreement should be disregarded because Georgia
public policy requires the court to apply Georgia law to agreements
involving employees in Georgia.1 The court then found
the noncompete unenforceable for several reasons. This decision may
make many ask, “is my noncompete unenforceable?”

Court Finds Noncompete Unenforceable

First, the duration of the noncompete was three years. However,
O.C.G.A. § 13-8-57(b) states that restraints against former
employees for more than two years in duration are presumptively
unreasonable. The plaintiff did not appear to present any evidence
rebutting that presumption.

The court also found the noncompete did not specify the types of
activities that the employee would be prohibited from engaging in
for a competitor. Therefore, the noncompete effectively barred the
former employee from working in any capacity for a competitor which
the court found to be overbroad and unreasonable.

Finally, the court struck down the noncompete because it
prohibited the employee from accepting employment with a competitor
within a geographic area of 120 miles of the two locations for
which he was responsible.

However, testimony at the interlocutory injunction hearing was
offered that each dealership for which he was responsible had an
assigned territory which encompassed approximately 10 miles.
Testimony at the hearing also showed that the geographic
restriction of the noncompete would reach into approximately eight
states and exclude several competing locations.

The court found this expansive territorial restriction to be
unreasonable under the circumstances.

This case further demonstrates the need to narrowly tailor
restrictive covenants, particularly noncompetes, to avoid having
them found unenforceable.

This decision may make many ask, “is my noncompete
unenforceable?” As always, please let me know if I can help.

Footnote

1 Curiously, the Court of Appeals repeatedly referred to
the choice-of-law clause as a forum selection clause (which it was
not) and analyzed it as such.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

POPULAR ARTICLES ON: Employment and HR from United States



Source link

Related posts

Lateral Moves: Making The Jump From The CSE To Private Practice – Securities

Epic Games – Apple Davası Bağlamında Dijital Pazarlarda “Rekabet” Kavramı – Antitrust, EU Competition

La CNIL sanctionne la collecte permanente des données de géolocalisation – Privacy Protection