Recently I’ve been getting a lot of questions about non-compete agreements. These are contracts that limit one party’s ability to work with the other party’s competition.
These agreements are often done in the employment context, but also are common in business sale agreements, partnerships, franchise and distribution agreements. The way one thinks of a noncompete is very different in those other contexts.
The enforceability of non-competes varies by state. In Georgia, non-compete law went through a huge overhaul a while ago, which has been a great development for businesses in Georgia. While still far from being a slam dunk, noncompetes are much more enforceable in Georgia than ever before. We’ll see how/if that changes in the future.
Georgia’s noncompete law allows noncompetes for 4 different types of employees – those who regularly solicit and engage in sales, those who primarily manage and direct the work of others, “key” employees and professionals. From this list at least two things are obvious: one, there’s room for interpretation on some of these terms, and two, the law doesn’t provide that every employee can be required to sign a noncompete. There’s no real value in getting noncompetes with low-wage employees, and those noncompetes probably won’t be enforceable anyway.
In the meantime, I’m working with Mary, who owns an event planning business. She has several sales reps who are in charge of arranging all the speaking engagements. She doesn’t want them to start a competing firm and host the exact same seminars and engage the same speakers at the same places – only 2 weeks earlier. She wants to keep the market share she’s worked so hard for.
As long as a noncompete is narrowly drafted and not overly broad or overly long, I think it's fair in this context. It's a useful tool to protect small businesses as long as it can be done without unduly hurting the employees' careers or the overall economy.
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