Do Not Implement New Restrictive Covenant Agreements:
Georgia’s New Restrictive Covenants Act Faces First Constitutional Challenge

In a letter to the editor published in the November 10, 2010 issue of the Fulton County Daily Report, the Chairman of Georgia’s House Judiciary Committee identified an apparent legislative oversight that calls into question whether Georgia’s New Restrictive Covenants Act (the “Act”) is constitutional, or whether it is even currently in effect.

By its express terms, the Act was to take effect on November 3, 2010, immediately following Georgia voters’ ratification of an amendment to the Georgia Constitution required to render the Act constitutional. However, because the constitutional amendment itself failed to include an effective date, the default rule dictates that the effective date of the amendment is January 1, 2011. Therefore, it is unclear whether the Act could permissibly take effect on November 3, 2010 as intended. Even if it did take effect, the legislative error makes the Act subject to a possible constitutional challenge.

As a result, employers should not implement any new agreement designed to take advantage of the broader protections afforded by the Act until this constitutional concern is resolved. Until such resolution, employers should ensure their employment agreements comply with existing case law applying strict scrutiny to restrictive covenants in employment agreements.

This information is provided for educational purposes only and is not intended to constitute legal advice; see disclaimer at http://www.www.mmmtechlaw.com/privacy-policy-and-disclaimer/. Please contact Jason D’Cruz of the MMM Employment Group with any questions: 404-504-7601; rjd@mmmlaw.com