Georgia Court of Appeals Rejects Restrictive Covenant Lacking Specific Geographic Limitation

Most businesses are concerned about protecting their market share, and many try to do this by requiring employees to sign a non-solicitation agreement. Sometimes referred to as restrictive covenants, these agreements set boundaries on the work someone can do after they are no longer employed by the company. Though employers appreciate the benefit of these contracts, they can unfairly limit a former employee’s ability to earn a living. 

While Georgia allows restrictive covenants, they must be reasonably limited in scope. Courts have the authority to modify provisions that they deem to be unfairly broad, and to declare an employment agreement completely unenforceable. In North American Senior Benefits, LLC v. Wimmer et al., the Georgia Court of Appeals was faced with the question of whether a non-solicitation agreement can be imposed on ex-employees no matter where they choose to work. 

North American Senior Benefits (NASB) employed Alisha and Ryan Wimmer. Their contracts included clauses prohibiting them from soliciting or recruiting NASB employees for two years after their employment ended. However, nothing in the agreement defined a geographic area where this restriction applied. Presumably, the company would technically have the ability to prevent the Wimmers from engaging in the restricted activities even if they moved across the country. 

Within two years of their departure from NASB, the Wimmers formed their own competing business and allegedly solicited some of their former colleagues. NASB sued the Wimmers, arguing that they breached the non-solicitation covenant. However, the Court of Appeals ruled for the couple, holding that the lack of a geographic limitation meant that the agreement was unreasonably broad. 

Though the Georgia Restrictive Covenant Act acknowledges that employers have legitimate business interests that can be protected through a non-solicitation clause, those interests must be balanced with the employee’s right to earn a living and pursue new opportunities. It is also important to remember that workers often do not have the ability to negotiate specific areas of an employment contract if they want to take a job. 

Whether you’re negotiating an employment contract that includes a restrictive covenant or are wondering if the non-solicitation agreement you signed is enforceable, the first step you should take is to consult with an experienced Georgia lawyer. At The Reddy Law Firm, P.C. in Alpharetta, we represent clients around the state in matters relating to non-solicitation clauses. Please call 678-629-3246 or contact us online to schedule a consultation.