Clients often ask whether they need to provide any consideration to their existing employees when they ask their employees to sign non-compete or non-solicitation agreements. The answer in Georgia typically is that continued employment is sufficient consideration for such an agreement. (The answer is different in Texas and North Carolina, for example.) Glisson v. Global Security Services, LLC, Georgia Court of Appeals, No. A07A1456, 2007 Ga. App. LEXIS 1047 ( Sept. 25, 2007), however, reminds us that this is not a universal rule. In that case, William Glisson entered into a two-year employment contract with his employer, Global Security Services. The agreement contained a non-compete provision, as well as a two-year term for employment. Approximately eighteen months after entering the agreement, GSS requested that Glisson sign a more extensive, non-competition agreement. Glisson did so, but shortly thereafter left GSS and formed a competing business. GSS brought an action against Glisson under the second non-compete provision that Glisson had signed.
The trial court ruled that the non-compete provision was enforceable and that GSS was entitled to an injunction preventing Glisson from competing in a certain area. The Georgia Court of Appeals reversed that judgment, holding that GSS was already obligated to employ Glisson through the end of his two-year term when it compelled him to sign the second non-compete agreement. Thus, the second non-compete agreement lacked consideration and was unenforceable.Glisson illustrates that continued employment may not be sufficient consideration for an existing employee to sign a non-compete agreement where the employee is not an at-will employee (instead, the employee is under contract). This could be an important exception to the general rule that an employer does not have to provide its employees any consideration for execution of a restrictive covenant.