In June 2023, the Georgia Court of Appeals held in North American Senior Benefits, LLC v. Wimmer that an employee non-solicitation covenant must contain an express geographic limitation to be enforceable. On September 4, 2024, however, the Georgia Supreme Court reversed the Georgia Court of Appeals’ Wimmer decision and held that the Georgia Restrictive Covenants Act (GRCA) does not require that restrictive covenants contain an express geographic restriction to be enforceable, but non-competition and employee non-solicitation covenants governed by the Section 13-8-53(a) of GRCA must still be reasonable in geographic scope.
The Georgia Supreme Court’s Decision
In Georgia, the enforceability of restrictive covenants is governed by the GRCA, OCGA § 13-8-50 et seq. The GRCA provides that employment contracts that restrict competition must be “reasonable in time, geographic area, and scope of prohibited activities.” OCGA § 13-8-53(a). (Different standards apply to customer non-solicitation and confidentiality covenants).
In evaluating the employee non-solicitation covenant at issue in Wimmer, the Georgia Court of Appeals held that to be deemed geographically reasonable, as required by the GRCA, a restrictive covenant must contain an express geographic limitation, and that a Georgia court may not add or “blue-pencil” in that material term if it is absent.
However, the Georgia Supreme Court has now held an express geographic restriction is not required by the GRCA – and that a restrictive covenant is not per se unenforceable for failing to include one. The court found that “nothing in the text of [the GRCA] mandates that a restrictive covenant contain an explicit geographic term, nor does [it] prohibit a covenant’s geographic area from being expressed in implied terms.”
The court reasoned that while the GRCA does require that a restrictive covenant be geographically reasonable – including by “sufficiently describ[ing]” and providing “fair notice of the maximum reasonable scope of the restraint” – to require an express geographic restriction would be to “impos[e] a stricter standard than that imposed by” the GRCA. See OCGA §§ 13-8-53(c)(1)-(2).
The court noted that the GRCA’s underlying purpose was to codify a “more permissive and flexible approach to restrictive covenants,” which bolstered its conclusion that a rigid requirement for express language was not necessary.
The Georgia Supreme Court remanded the case to the trial court to determine whether the employee non-solicitation covenant at issue in Wimmer is reasonable in geographic scope under the totality of circumstances. As the Georgia Supreme Court suggests, the trial court will have to determine, for example, whether the covenant “should be considered to have a geographic scope aligned with the current homes and places of employment of the covered employees,” or whether it should be given “global or universal effect.”
What Does This Mean for Employers?
While the Georgia Supreme Court’s decision relates to the enforceability of an employee non-solicitation covenant, its ruling is not limited to that type of provision. Indeed, the Georgia Supreme Court’s decision appears to apply not only to employee non-solicitation covenants but also to non-competition covenants under Section 13-853(a) of the GRCA.
Still, employers should consider keeping or adding express geographic restrictions to their employee non-solicitation and non-competition covenants. Indeed, the recommended way to maximize the chances that a Georgia court finds that such covenants are found geographically reasonable is to include a reasonable geographic restriction.
