In Georgia, and everywhere, as too many employers know, employees solicit (attempt to steal) clients from their former employer. There exist obvious and significant financial and professional incentives for employers to prevent this from happening. The answer is a well drafted non solicitation agreement, amongst other safeguards. The problem is that many non solicitation agreements are poorly drafted, because whoever drafted the agreement failed to take into account applicable, and stringent, Georgia laws. In the world of non compete/solicitation agreements, Georgia law is notorious for being extremely unfavorable to employers. And although the Georgia legislature passed employer-friendly legislation (HB 173) in this area, and Governor Sonny Perdue signed that legislation into law, voters must still amend the Georgia Constitution so that the legislature has the power to make HB 173 actual law. That may be difficult.
Regardless, Georgia courts, currently, strictly construe non solicitation agreements. That means: if any potion of your non compete/non solicitation agreement is held to be invalid, the entire agreement is void.
We have written about non compete and non solicitation agreements before on this blog. Today, we are writing this entry to give you a few considerations when reviewing or attempting to draft your own non solicitation clause, although we highly recommend that you seek a good lawyer who has experience in this area to help you with drafting these types of agreements; the stakes are too high to rely on a poorly drafted agreement made by someone who is not familiar with Georgia law.
The law: “Georgia law is clear that unless the non-solicit covenant pertains to those clients with whom the employee had a business relationship during the term of the agreement, the non solicit covenant must contain a territorial restriction.” Trujillo v. Great Southern Equipment Sales, LLC, citing Advance Technology Consultants v RoadTrac, 250 Ga. App 317.
In Trujillo (the above-mentioned case) the employer illegally expanded the class of prohibitve clients by stating, within the non solicitation clause, that
“the non-solicitation restriction set forth in this Section 2 is specifically limited to Customers of Employer with whom Employee had contact… or about whom Employee had a confidential or proprietary information becasue of his/her position with Employer.”
As you can read, the employer started off great, by restricting the scope of the clause to clients that the employee truly had contact with. But then the non solicitation clause went awry of strict Georgia law, by stating that the employee could not solicit clients that he or she had gained confidential or proprietary information about, by merely working for the employer. While you may think that’s a reasonable restriction, Georgia courts do not.
The Trujillo court reasoned that the language pertaining to confidential and proprietary information did not constitute a valid confidentiality provision or a “reiteration” of the confidentiality clause found in Trujillo’s contract. Rather that language, in the Court’s opinion, constituted an impermissible attempt by the employer to broaden the class of customers (clients) whom Trujillo could not solicit. As a result, the court stated–and this is what really hurts employers– “because the non-solicitation clause was unenforceable, the non competition clause included in the agreement was likewise unenforceable.” That’s a result that you as an employer do not want.
What lessons can be learned? First, get a good lawyer that knows Georgia law in the area of non compete non solicitation agreements. Second, regardless if you’re an attorney or not, don’t try to be “slick” when drafting these agreements. The Trujillo court made it clear: just because you do not use the red-flag term all clients does not mean that you can avoid the harsh and scrutinizing results of Georgia law. Moreover, understand fully that if you decide to use broad language such as all clients, strongly consider placing a geographical limitation within the non solicitation clause.
Additionally, understand that non solicitation agreements do not mean that a client cannot solicit your employee– this area of law is tricky and involves other complex legal issues.
Ultimately, when you attempt to use a non solicitation agreement against an employee to protect your business interest, your success will depend on the facts of your case as applied to Georgia law. You need a good lawyer.
Continue reading →