Non-compete Agreement Litigation

non compete agreement litigation

Our law firm represents businesses, executives, former employees, physicians and other healthcare professionals in litigation involving non-compete, non-solicitation and confidentiality agreements. If you have a dispute regarding a non-compete agreement, our firm can help you. We have substantial experience representing both employers and employees in litigation over restrictive covenants.

Atlanta, Georgia Restrictive Covenants Law Firm

We represent our clients in restrictive covenant litigation, which often involves the following types of issues:

  • whether restrictive covenants are too broad geographically
  • whether non-compete provisions are unreasonably long in duration
  • whether non-compete provisions are overly broad in the scope of prohibited activities
  • whether restrictive covenants are void as against public policy
  • damages and other remedies

Our approach is to enable our client, whether employer or employee, to realistically assess the enforceability of restrictive covenants in court and develop an effective litigation strategy to protect their interests.

Our law firm’s clients are often professionals, physicians, physician groups, healthcare associations, federally qualified health centers, ambulance services, elder care entities, pharmacies and other healthcare related businesses. Our attorneys are experienced advocates in the court room and at the negotiating table. They have extensive experience as attorneys and are AV-rated by Martindale Hubbell. To schedule a consultation, email us at info@hamillittle.com or contact us at the office nearest you.

To Compete or Not to Compete

Non-compete agreements and other restrictive covenants often result in litigation after a key employee's employment ends and he is reemployed by his former employer's competitor, due to the unavoidable tension between the former employer's need to protect proprietary interests and the employee's need to ply his trade to make a living. Employers and employees some times mistakenly assume a restrictive covenant is enforceable just because it is a signed contract, perhaps even drafted by a lawyer. Rarely is the outcome of such litigation automatic, however, since Georgia and South Carolina law provide that restrictive covenants must be examined on an ad hoc basis by the court to determine whether the provisions are enforceable.

Generally speaking, the law of Georgia and South Carolina is that a non-compete agreement that is only a "partial restraint of trade," is founded upon valid consideration, and is reasonable in its restrictions on the employee, is binding and enforceable. Enforceability is something a court must determine on a case-by-case basis. When a Georgia or South Carolina court is called upon to determine whether a non-compete agreement is enforceable under the law, the court's answers to the following questions are determinative: (1) Is the restriction necessary to protect valid business interests? (2) Is it reasonably limited in duration and geographic scope? (3) Is it too oppressive in preventing the former employee's attempts to find work? (4) Is it consistent with public policy? and (5) Is it supported by consideration? If the answer to any of these questions is no, the agreement cannot be enforced as written.

Georgia law respecting non-compete agreements was recently dramatically changed following an amendment to Georgia's Constitution to allow the legislature to pass laws concerning restrictive covenants. The new law, the new Restrictive Covenants Act, O.C.G.A. § 13-8-50 et seq., is in many ways much less employee-friendly than prior case law and virtually negates over a century of Georgia court holdings strongly adverse to enforcement of non-competition agreements (and other restrictive covenants) as contrary to public policy. The most notable change under the new law is that it authorizes the trial judge to "blue pencil" (i.e. modify) provisions of a restrictive covenant that the judge determines are too broad. This may be a sea change for litigation purposes.

How particular details of the Restrictive Covenants Act will play out in court disputes about specific factual circumstances remains to be seen, as the law remains relatively new. A general consensus in thinking among Georgia lawyers seems to be, however, that (a) under the new law it will be substantially more likely that Georgia employers will succeed in their attempts to enforce restrictive covenants; and (b) judges will have more work to do in that the new law allows them to rewrite restrictive provisions they deem noncompliant with the law. All Georgia employers should have existing restrictive covenants reviewed by a qualified business litigation or employment law attorney, in light of the new law.

Historically, the pattern of non-compete agreement litigation has been predictable. An employee signed a non-negotiable employment agreement at the inception of employment that contained non-compete provisions and other restrictive covenants. With the job, the employee of necessity obtained access to sensitive, proprietary information during the course of the employment (e.g. customer lists, pricing, methods of doing business), access to and relationships with the employer's customers and employees, and valuable training provided by the employer. When the employment ended (for any reason) the employee, understandably needing a job to provide for his livelihood and support his family, sought work that tended to be with employers who were in competition with the former employer, often in the same geographic area. Both the employer's need to protect its proprietary business interests and the employee's need to make a living are legitimate, and, therefore, in the event of a lawsuit to enforce restrictive covenants, the court's job would be to balance the parties' competing interests and decide whether the restrictive covenants are enforceable. Essentially, the judge would decide whether the scope of the restrictive covenants exceeded what is minimally necessary to protect valid business interests, applying the factors listed above. If any provision of the restrictive covenant was found to be overly broad, the entire agreement would be declared unenforceable because (until recently in Georgia), the law did not permit the court to "blue pencil" (i.e. modify) the contract. Thus many lawsuits involving restrictive covenants were resolved by a court decision early in the case, typically on a motion for a temporary restraining order against the employee concerning his new job or business pursuit, that a non-compete provision was unenforceable on its face.

When a key employee's employment ends, neither the employer nor the employee (nor the employee's new employer) should assume that a restrictive covenant is enforceable or unenforceable, but should engage a qualified attorney. Litigation under the Georgia Restrictive Covenants Act will likely be very different than litigation under former law because the new law favors enforcement and enables the trial court to blue pencil agreements so that they are reasonable and enforceable. Additionally, the Georgia Restrictive Covenants Act contains provisions that will breed new issues and arguments in litigation, such as: whether a person is an "employee" as defined under O.C.G.A. ' 13-8-51(5)(A); whether the court should modify provisions by enforcing them pursuant to O.C.G.A. ' ' 13-8-51(11), (12) and 13-8-53(d); and whether enforcement will impose an undue financial burden upon the employee O.C.G.A. ' 13-8-58(d).

In South Carolina, unlike Georgia's new law, blue penciling is generally not an option where the covenants are "indivisible," though how this test is applied by a court in litigation is unpredictable. Therefore, particularly for employers and employees in Augusta and the CSRA, whether the employment agreement provides that Georgia versus South Carolina law applies can be critical.

Georgia and South Carolina Non-compete Litigation Law Firm

Our law firm represents clients in Atlanta and Augusta, Georgia; Aiken, South Carolina; and often throughout the States of Georgia and South Carolina. (See Communities We Serve.) Our attorneys have extensive experience as a lawyers and have been awarded Martindale Hubbell's AV rating, its highest rating. To schedule a consultation with one of our attorneys, email us at info@hamillittle.com or contact us at our office nearest you.