Employment contract - covenant not to compete held unreasonable and overbroad
In Fellows v. All Star Inc., decided 3/17/05, the Georgia Court of Appeals held that the non-competition covenant in an employment contract was unreasonable and overbroad when it prohibited the former employees from contacting or soliciting any customer of the employer, no matter where located and no matter whether the employees had had contact with those customers.
The reasonableness of a non-compete clause is determined by applying a three-element test of duration, territorial coverage, and scope of prohibited activity. If not carefully and narrowly drafted, such covenants may well be unenforceable. Broad, overreaching provisions may be effective to intimidate employees, but not enforceable when tested in court.
See the court's opinion below.
The Shigley Law Firm represents plaintiffs in wrongful death and catastrophic injury cases statewide in Georgia, and in other states subject to the multijurisdictional practice and pro hac vice rules in each state. Ken Shigley was designated as a "SuperLawyer" in Atlanta Magazine and one of the "Legal Elite" in Georgia Trend Magazine. He is a Certified Civil Trial Advocate of the National Board of Trial Advocacy, Chair of the Southeastern Motor Carrier Liability Institute and former chair of the Georgia Insurance Law Institute. He particularly focuses on cases arising from truck wrecks and accidents (tractor trailers truck wrecks, semi truck wrecks,18 wheeler truck wrecks, big rig truck wrecks, log truck wrecks, dump truck wrecks).
I very much appreciate your blog's detailed information on enforceability of non-compete agreements. In March I quit an Atlanta PR agency without notice due to concerns about client billing relative to services rendered. The particular issue involved a client that now seeks my services, which would be the same as those restricted in my two-year non-compete agreement. I would be contracted by the client as an independent, sole proprietor, communications specialist. It appears from case law that the agency's non-compete is void due to unreasonable restrictiveness and ambiguity. If it matters, The PR firm/former employer is incorporated as either an LLC or S-Corp (I don't remember , and haven't looked it up). Here is the entire non-compete clause from my contract:
9.Non-Solicitation of Customers. During the term of this Agreement and for a two (2) year period
following the termination of this Agreement for any reason, Executive will not, directly or indirectly, alone or on behalf of any person, partnership, corporation, limited liability company or other business organization, recruit, solicit, or otherwise contact customers of the Company for the purpose of undertaking any activities which make up the business of the Company.
Fellows v. All-Star seems to make clear that the clause is not enforceable. Do I have anything to fear?
I appreciate your time, and do hope you will share an initial impression. I have modest resources at this time, so wish to be careful and selective about retaining counsel in advance of any potential litigation.
Best regards,
A
