Dissecting the Non-Compete
Ideally, every professional position held would end with a handshake and a letter of recommendation. But for those working under the constraints of a non-compete, that’s not always how their story ends. Non-compete contracts, which are designed to protect the interest of the employer, work by limiting employment options within a set industry and geographical perimeter for a set amount of time after an employee leaves a company. The contracts are usually signed during on-boarding, when a future employee is optimistic about taking the next step in their career. At the time, it’s an easy ‘no problem!’ when presented with the paper work. After all, this is the job they’d been waiting for. What could go wrong? According to the team at Whitehurst, Blackburn and Warren, a lot. As a result, the courts are seeing disagreements from a variety of industries over these contracts on a regular basis. “The most common industry is, of course, in sales-based industries,” said Attorney Joe Cargile, partner at WBW. “But you’re seeing non-competes in insurance, in the medical profession, in the construction industry, and the automotive industry.
“You’re seeing non-competes really in all of these industries because what these employers are starting to say is ‘Hey, I’m going to train employees on how we do our business, give them tips and tricks, and I want to make sure that person doesn’t take that training and turn around and compete against me.’” In these instances, WBW says, non-competes are a valid, legal way for an entrepreneur or supervisor to protect their professional interests. If the geography, industry, and time period are specific and reasonable, courts are likely to rule in the favor of the employer if the matter is ever pushed. In the State of Georgia, the phrase ‘reasonable’ isn’t open to interpretation when it comes to length of time. In 2011, the state’s highest courts passed a ruling stating that: “ […] the court shall presume to be reasonable in time any restraint two years or less in duration […].”
Translation? Non-competes that forbid employees from functioning in their industry for any length of time longer than two years aren’t enforceable in Georgia. Neighboring states, including Florida, have similar standards. The ruling also notes that these contracts need to be specific regarding the industry the non-compete pertains to, or the “legitimate business interests” being protected.
For example, if a barbecue restaurant’s lead pit-master leaves his job, the courts typically agree that he shouldn’t be allowed to open a new barbecue establishment a mile down the road immediately after his departure. However, if he wanted to open up a sandwich shop across town – that could be open for debate. Likewise, if he waits the required two years, launching a new barbecue restaurant nearby would be permissible. WBW cautions that where non-competes can cross the line is when they set unrealistic expectations or restrictions. If that same pit-master wanted to open a barbeque restaurant two hours away, using original recipes, it would likely be deemed unrealistic of his former employer to attempt to enforce a non-compete – regardless of what their contract together states. “You don’t really know if that contract is going to hold up until someone challenges it,” said Cargile. “Someone might be under the impression that they’re not allowed to go out and compete with their former employer. In those cases, they may want to come in and meet with an attorney.” If a non-compete meets the three major requirements needed to be considered valid (geography, industry specific, and timeline) courts are likely to rule in favor of the employer. Ignoring this ruling could have extreme consequences, including the state potentially closing your new business. According to Cargile, the best-case scenario is for an employer and employee to part ways amicably – which usually requires the departing employee to be transparent about their future career plans, and give the employer enough time to prepare accordingly. “Just because a non-compete isn’t enforceable, or just because it may be too vague or too broad, doesn’t mean that the employer you’re about to leave can’t make it very difficult for you for the next 6 or 12 months,” said Cargile. “They may even initiate litigation that ultimately results in nothing. I think it always goes back to my recommendation that if you have the opportunity to sit down and talk with that person — even if you’re doing it with attorneys present – do it. You never know what a productive, pleasant conversation can bring.” Do you have questions regarding a non-compete contract? Call the legal experts of WBW at 229-226-2161.
In the State of Georgia, three major factors make a non-compete enforceable:
Geography: Is the geographical area outlined in direct competition with your former employer?
Industry Specific: Are you serving the same function your former employer did to the same audience-pool?
Timeline: Is the non-compete for less than two years?