Call to Action: Restrictive Covenants in Various Corporate Documents

Georgia House Bill 30, which would implement the new Georgia Restrictive Covenants Act (the “Act”), was passed by the Georgia House on February 22, 2011, and is expected to go to the Senate for a vote at some point in the near future.  If the Bill passes the Senate as expected, it will go into effect immediately when the Governor signs it, but will not retroactively apply to any contract signed before it takes effect.

Companies with employees in Georgia should consider the following:

  • Review your existing corporate and employment agreements to determine if you should revise them to comply with the Act when it becomes effective;
  • Do not revise your employment agreements now; wait for the Act to become effective;
  • If you have already changed your agreements to conform to the Act, review them immediately to determine if remedial steps should be taken; and
  • Review your NDAs and agreements with other third parties to determine if the Act will impact them.

The Act not only applies to employment agreements, but will also affect other corporate contracts and agreements between or among:

  • Distributors and manufacturers;
  • Lessors and lessees;
  • Partnerships and partners;
  • Franchisors and franchisees;
  • Sellers and purchasers of a business or commercial enterprise; and
  • Two or more employers.