Important Notification Regarding the Effective Date of the New Georgia Restrictive Covenant Statute

Employers should be aware of the following important issue regarding the new Georgia restrictive covenant statute (O.C.G.A. §13-8-50 et seq.). On November 10, 2010, the Chairman of the Georgia House Judiciary Committee published an article in the Fulton County Daily Report recognizing concerns with certain issues surrounding the effective date of this new statute. As noted in our previous Georgia eAuthority, the restrictive covenant statute expressly states that it was to become effective the day following the November 2, 2010 ratification vote and that it was to apply to all restrictive covenant agreements entered into on or after that date. However, since then, issues have been raised regarding the nature of the wording of the House Resolution, the Constitutional Amendment and the Georgia Constitution in regard to the effective date of the constitutional amendment and thus, the statute. As a result, it is possible that this new statute actually will not become effective until January 1, 2011. If this happens, restrictive covenants executed between November 2, 2010 and January 2, 2011 will still be governed by the former common law.

This issue is still unclear and ultimately may be resolved by the Georgia courts (assuming such could take place by January 1, 2011). In the meantime, Georgia employers should not execute new agreements with their employees based on the assumption that the new statute will apply. Of course, amendments to employment agreements between now and January 2, 2011 may still be warranted as long as employers recognize that they may be interpreted under the former body of law.