New Day in Georgia for Restrictive Covenants
On November 2, Georgians voted overwhelmingly in favor of updating Georgia's restrictive covenant law. The new law is codified at O.C.G.A. 13-8-50 et seq.
The law is not retroactive, so it does not affect existing contracts. However, for many businesses who have learned that their agreements are not enforceable under Georgia law as it existed previously, now is the time to review the statute and consider updating the agreements. The law affects not only employer-employee agreements but also franchisor-franchisee, distributorship, lease, partnership and employer-employer agreements.
In the law, Georgia also adds blue-penciling to the mix for the first time for many agreements (previously, the courts would blue pencil in the instance of sale of business and in some cases partnership agreements, but the blue pencil was not applied uniformly).
This is a new day in Georgia and there will be much to be watched, written, and learned about the new law and courts' interpretations of the statutory language in the next few months. Stay tuned.
ALL - there is a question as to the effective date of the legislation that is being examined. Will post more information when we have it.