Georgia House of Representatives Passes "Fix" to Restrictive Covenant Act
As we have posted previously, there is some question regarding the effective date of Georgia's Restrictive Covenant Act, O.C.G.A. § 13-8-50 et seq., the statute passed by the Georgia General Assembly in 2009 and authorized by passage of an enabling constitutional amendment in November 2010. The RCA changes Georgia’s legal regime regarding restrictive covenants. Because of the uncertainty regarding the statute’s effective date (and resulting potential constitutional issues), the General Assembly has been considering a bill - House Bill 30 - that would re-enact the RCA to end any constitutional questions.
HB 30 also addresses a second issue regarding the RCA. There has been some debate as to the meaning of the provisions of O.C.G.A. § 13-8-56, specifically whether it applies only to in-term covenants. HB 30 revises that section of the non-compete statute by making it clear that the presumptions contained in O.C.G.A. § 13-8-56 apply to in-term and post-term covenants. This provision is important to businesses and employersfor a number of reasons, including that Georgia employers will be permitted to list specific competitors in place of specifying a geographic area in a non-compete restriction.
On Tuesday, February 22, 2011, the House of Representatives passed HB 30 by a margin of 104 to 58. The bill is now before the Senate. We will continue to monitor the progress of the bill.
