Georgia Court of Appeals: Non-Solicitation-of-Employees Covenant Must Contain Express Geographic Limitation

Updated December 20, 2023: The Georgia Supreme Court has agreed to review this case.

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The Georgia Court of Appeals recently provided important clarification of the requirements for non-recruitment covenants under Georgia’s 2011 Restrictive Covenants Act. In North American Senior Benefits, LLC v. Wimmer, 2023 WL 3963931 (Ga Ct. App. June 12, 2023), the court held that an employee non-solicitation provision must contain an express geographic limitation to be enforceable. The decision also explained that while courts have some discretion to “blue pencil” (narrow/sever) restrictive covenants to bring them into compliance with Georgia law, a court may not add a geographical limitation to a document lacking that material term.

The Georgia Court of Appeals’ Decision

Georgia’s Restrictive Covenants Act requires that restrictive covenants be “reasonable in time, geographic area and scope of prohibited activities.” Some trial courts in Georgia had already found that this language requires an express geographic restriction in employee non-solicitation provisions, but until now, no Georgia appeals court had addressed the issue.

In the instant case, the plaintiff, an insurance marketing company, sued two former independent agents for violation of their agent contracts. Those contracts contained a non-solicitation provision that for two years after their termination prohibited the agents from soliciting any employee, agent, or independent contractor of the company. The plaintiff claimed the agents had violated this covenant by poaching its employees.

In 2022, Judge Walter W. Davis of the Georgia State-wide Business Court refused to enforce the post-employment employee non-solicitation provision, finding it unenforceable under Georgia’s Restrictive Covenants Act because it contained no geographic limitation. Judge Davis also declined to “blue pencil” the covenant to bring it into compliance with the Georgia’s Restrictive Covenant Act. To blue pencil the provision, Judge Davis opined, “would materially alter the restriction in a way that goes beyond simply narrowing or severing impermissible language or terms.” The court dismissed the plaintiff’s claims related to the agents’ alleged breach of the employee non-solicitation provision.

NASB appealed, arguing that the Business Court should have “blue penciled” the provision. On June 13, 2023, the Georgia Court of Appeals, by split decision, affirmed Judge Davis’s ruling. The Georgia Court of Appeals agreed that Georgia’s Restrictive Covenants Act does require that employee non-solicitation provisions contain an express territorial limit, and that a court may not write in that material term. While the geographic component is to be “read forgivingly,” the court noted, it must be present. Without any geographic restriction, the court held, an employee non-solicitation provision is altogether void and unenforceable. 

What Does This Mean for Employers?

While it is possible that the Georgia Supreme Court could overrule Wimmer or that another appellate panel could render a contrary decision – the safe course at this juncture for employers is to include a geographic limitation in non-recruitment provisions governed by the Restrictive Covenants Act. Employers should also consider amending existing employee non-solicitation provisions that lack a territorial limitation. In the current labor market, employers increasingly feel the need to enforce such provisions. If Georgia courts will not modify employee non-solicitation provisions where doing so would require adding the material geographic term, a Georgia employer gains little from leaving such unenforceable provisions in place.

Georgia’s case law with respect to post-employment restrictive covenants is complex, and many areas are open to interpretation, or require further guidance. Employers should seek legal advice on how Georgia law may apply to their specific circumstances.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.