It was five years ago this week (May 11, 2011, to be precise) that Georgia's new restrictive covenant statute went into effect. Prior to the effective date of the statute, Georgia was (surprisingly for many out-of-state lawyers and businesses) one of the hardest states in which to enforce a restrictive covenant. As the Georgia Supreme Court stated in a a self-deprecating manner in Fuller v. Kolb, "Ten Philadelphia lawyers could not draft an employer-employee restrictive covenant agreement that would pass muster under the recent rulings of this court." (No one knows why Justice Ingram selected Philadelphia as the home of the most astute lawyers in the country, but I'm sure that the lawyers in our Philadelphia office would whole-heartedly agree.) The Georgia Supreme Court made this comment in 1977, well before the case law on restrictive covenants proliferated and became difficult for all but the most experienced practitioners to navigate.
Three years ago, we addressed the question of why college football programs do not use non-compete restrictions to prevent coaches from moving to direct rivals. At the time, we mentioned the fact that Arkansas was a program that had utilized a non-compete restriction with its then-current coach, Bobby Petrino:
In fact, a notable example of a college coach who does indeed have a non-compete restriction - Arkansas' Bobby Petrino - establishes the limits ...
On May 11, 2011, Governor Deal signed House Bill 30, Georgia’s Restrictive Covenant Act. The upshot of the signing of the legislation is that a new day has dawned in Georgia for restrictive covenants signed on or after May 11, 2011.
Georgia's non-compete statute is inching closer to reality. A bill intended to clear up any controversy is on the Governor's desk awaiting his signature or veto. Stayed tuned for future updates.
The enactment of Georgia's Restrictive Covenant Act has been stained with uncertainty as to its effective date. The Georgia House of Representatives recently took action to clear up the picture, and the ball is now in the Senate's court, and soon to be in the Governor's.
The effective date of Georgia's recently enacted non-compete legislation has been widely questioned. A recently introduced, but as of yet not passed, bill in the Georgia House aims to end the debate.
By now, it is almost old news that Georgia voters overwhelmingly passed a constitutional amendment authorizing a new statutory framework for enforcement of restrictive covenants. But a question has quickly emerged as to when the new law is effective.
In a landslide victory with 68% of the votes, the constitutional amendment authorizing a new statutory framework for enforcement of restrictive covenants in Georgia was passed by Georgia voters on November 2, 2010. The new framework goes into effect immediately, but it will only be applied to restrictive covenants that are signed November 3, 2010 or thereafter.