How can you protect the investments you make in your employees?

noncompete and nonsolicitation agreements 

Several large Silicon Valley companies, including Apple and Google, are defendants in an antitrust class-action lawsuit because they agreed not to hire each other’s employees. The defendants struck their anti-poaching deals so they wouldn’t lose talented employees and to keep salaries artificially low.

It’s a cliché, but it’s true: a business’s most valuable assets walk out the front door every day. Anti-poaching agreements with your competitors are illegal. So what can you do to protect the investments that your business makes in the professional development of your employees? You should have your key employees sign noncompete and nonsolicitation agreements.

Noncompete agreements used to be difficult to enforce in Georgia. Courts would declare them invalid and unenforceable if they weren’t very narrowly drafted. If the court considered the agreement to be overly broad in any way, it would not enforce it. But that changed in 2011 as a result of new laws passed by the Georgia legislature.

Now Georgia courts will “blue pencil” noncompete agreements. Blue penciling means that if the court considers the noncompete restriction to be overly broad in some way, courts will still enforce it to the maximum extent the court considers reasonable. That may create some uncertainty because the scope of the restrictions are left up to the vagaries of the judge assigned to the case. But noncompete agreements will no longer be declared invalid if they are deemed to be too broad. Now, at least to some extent, you can limit your employees’ ability to take what they’ve learned from you and put it to use for a competitor.

Nonsolicitation agreements are similar to noncompete agreements, but historically have been easier to enforce in Georgia. Nonsolicitation agreements prevent your employees from trading on the relationships they develop with your clients by preventing them from soliciting your clients for a competitor for a period of time.

Businesses that make large investments in the training and professional development of their employees, and whose success is determined in large part by the strength of the relationships their employees have with their clients, should use both noncompete and nonsolicitation agreements. If your business operates in Georgia and has noncompete or nonsolicitation agreements that were signed before 2011, you should have them reviewed and rewritten to take advantage of the more favorable laws now governing these agreements.

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