Review Your Restrictive Covenant

Employers want to protect their customer and company information. To do this many employers require their employees to sign restrictive covenant or non-compete agreements when they join the company.

Mark Alexander, a trial lawyer with Stewart, Melvin & Frost, joins us this morning to discuss these agreements and other dos and don’ts when an employee leaves a company. Mark’s firm – Stewart, Melvin & Frost – is one of Northeast Georgia’s largest and fastest growing law firms and is widely respected as an “Uncommon Practice” – the firm features an experienced team of attorneys, each of whom specializes in a particular practice area.

Question: Mark, what is a restrictive covenant?

Mark: They are contracts that restrict or regulate competitive activities between different parties such as an employer and an employee. Under law, an employer can require a new employee to sign an agreement that prevents that employee from competing against the company for a certain time period after they leave the company.

Most commonly known types of a restrictive covenant is a non-compete or non-solicitation agreement between an employer and an employee. A non-compete restriction may apply to a geographical territory where the employee is barred from doing business if he or she leaves the company. A non-solicitation provision prevents employees from contacting customers or soliciting business from them. Also, confidentiality provisions may apply to material such as a company customer list.

Question: Are restrictive covenants hard to enforce in Georgia?

Mark: The Georgia Law was changed in May 2011 making it easier to enforce a Restrictive Covenant. You need to check the date when the Restrictive Covenant was signed. If it was before May 2011 then you may have a harder time enforcing it. If it’s after May 2011, it will make enforcing it more likely.

Question: From an employee’s standpoint, what’s the best way to handle their exit from the company?

Mark: To show their integrity and make a good-faith gesture, it’s best for an employee not to take anything with them that’s not a personal item. Don’t take company equipment such as tablets, laptops or cell phone. That’s obvious. Don’t email a customer list or company information to your personal email or print out the material.

Most of that would be covered in a non-compete agreement but if there is not one in place, leave honorably. Also, it’s not hard for the employer to check the employee’s computer after they leave to see what they’ve done. The best advice is to review the restrictive covenant and discuss what the employee should leave behind and what they can take. It’s been my experience that this reduces the potential for litigation.

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