Restrictive Covenants

Restrictive Covenants

We represent healthcare businesses, providers and professionals with regard to restrictive covenants. Our law firm negotiates, prepares and reviews:

  • Non-compete agreements
  • Non-Solicitation agreements
  • Confidentiality agreements
  • Employment agreements containing restrictive covenants
  • Severance agreements containing restrictive covenants
  • Settlement agreements containing restrictive covenants

We have represented numerous healthcare providers with regard to non-compete agreements. Our focus is on representing healthcare providers and healthcare businesses.

“Kevin Little [of Hamil Little] represented the Medical Association of Georgia and individual physicians in a matter addressing the abuses of the health insurance industry. Kevin [of Hamil Little] was a pleasure to work with and brought forth legal theories to hold the health insurance industry accountable to physicians and patients. We received outstanding representation from Kevin [of Hamil Little].”

Donald Palmisano, CEO and General Counsel, Medical Association of Georgia.

Our offices are located in Atlanta and Augusta, Georgia, and we often represent healthcare providers throughout the states of the Georgia and South Carolina. (See Communities We Serve.) To schedule a consultation with one of our attorneys, email us at info@hamillittle.com or contact us at our office nearest you.

Restrictive Covenants in Employment

Comprehensive employment agreements that contain properly crafted restrictive covenants, including non-compete agreements, non-solicitation agreements and confidentiality agreements, are indispensable to adequately protecting intellectual property and other proprietary interests of many businesses. Employers should understand that often their key employees can become mere pawns of a competitor that might want the employee for the purpose of pirating proprietary rights.

Georgia law respecting non-compete agreements was dramatically changed in 2010. In November 2010, Georgia's voters approved an amendment to Georgia's Constitution to allow the Georgia Restrictive Covenants Act (RCA), O.C.G.A. '' 13-8-50, et seq. to become law. Due to procedural issues concerning the enactment of the RCA and the constitutional amendment authorizing it, lawyers and employers will be left to wrestle with the effective date of the new law. A consensus seems to exist that non-compete agreements that predate November 3, 2010 are governed by the "old" law, and non-compete agreements that post date May 11, 2011, will be governed by the RCA. But other agreements may be in a grey area as to which law applies.

The RCA includes several provisions that will effectuate dramatic change in drafting and litigating non-competition agreements in Georgia. Most of the changes are generally considered more favorable to employers than employees, including the following: (a) courts may "blue pencil" agreements (i.e., modify overly broad contract provisions to render them enforceable); (b) courts may evaluate non-compete and non-solicitation agreements separately and enforce one without regard to the enforceability of the other; (c) "confidential information" is defined in such a way to enhance the enforceability if non-disclosure provisions.

The RCA also includes provisions that favor employees, however, such as the following: (a) lower level employees could be exempt from particular provisions of the new law if they do not have certain skills, abilities, customer contacts or confidential information; (b) an employee can demand clarification of a restrictive covenant, and the employer must respond within 30 days, which can be used against the employer in court, O.C.G.A. ' 13-8-2.1(f)(2); and (3) a failure by the employer to respond to such a demand can be considered by the court.

In South Carolina, blue penciling remains prohibited if the subject covenants are "indivisible." In either Georgia or South Carolina, factors a trial court will consider in evaluating whether a non-compete provision is enforceable are: (a) whether the provision is essential to protect legitimate business interests; (b) whether the restriction is reasonably limited in duration and geographic scope; (c) whether the provision is overly oppressive in how it prevents the former employee from plying his trade; and (d) whether enforcement would violate a public policy.

Non-solicitation agreements

The purpose of a non-solicitation agreement is to restrict employees from soliciting an employer's clients or employees. The classic situation that a non-solicitation agreement (and non-compete agreement) is intended to prevent is a key employee is introduced to a business idea and methodology, then takes that knowledge (obtained from the employer), the employer's customers and the employer's employees, and competes with the employer. More often, the lines of what is legal competition and what is not are grey and debatable, which enhances the possibility of a dispute. Ensuring that the parameters of a non-solicitation agreement comply with current law is critical to the agreement's effectiveness in protecting the employer's interest. A common mistake of employers is to simply assume the bare existence of an agreement styled as a "non-solicitation agreement" -- perhaps an old form the employer has for years had all employees routinely sign -- actually protects the employer's proprietary interests. If the agreement's actual wording is non-compliant with current case law and Georgia's statutory provisions, however, a non-solicitation agreement may be essentially meaningless.

For example, a non-solicitation agreement should distinguish "accepting" versus "soliciting" particular business. Generally speaking it is a good idea, even under Georgia's new employer-friendly law, to draft restrictive covenants conservatively, with an eye toward how judges have tended to decide restrictive covenant cases in the past. If particular provisions are not truly needed to protect the business, typically it will be better not to include them.

To schedule a consultation, email us at info@hamillittle.com or contact us at our office nearest you.

* DISCLAIMER: Any result this law firm or any lawyer of this law firm may achieve on behalf of one client in one matter does not necessarily indicate similar results can be obtained for other clients.