Judge Smails was Right! But there is a Limit When it Comes to Non-Competes

(SPOILER ALERT – CLICK THROUGH TO NEXT PAGE FOR THE ARTICLE AND A CLASSIC VIDEO CLIP)

If you know me, you know that I do a LOT of work in the non-compete/restrictive covenant space. A recent article in The New York Times discusses the impact that restrictive covenants can have on the work place. (Link on next page.)

Employment lawyers know this, but workers are often astonished to learn that they’ve signed away their right to leave for a competitor. Timothy Gonzalez, an hourly laborer who shoveled dirt for a fast-food-level wage, was sued after leaving one environmental drilling company for another. Phillip Barone, a midlevel salesman and Air Force veteran, was let go from his job after his old company sent a cease-and-desist letter saying he had signed a noncompete.

Such an inquiry is nothing new; there have long been articles on Jimmy John’s use of covenants for sandwich makers and summer camp counselors.

And while Georgia used to be one of the toughest states for employers in this area (I see you California!), the 2011 revisions changed this. Growing out of a purported pro-business movement stemming from the financial crisis, Georgia changed its constitution – we do this often – to re-write (pun intended) how Georgia court are now empowered to blue pencil / change covenants from what was previously agreed to in writing.

The 2011 Georgia law has some language that can limit this – it seeks to apply to “key employees” and grants the Courts discretion in whether they blue pencil the covenants at all.

But the costs associated with such efforts can be prohibitive, especially for employees. As noted in the New York Times’s article,

. . . A rival textile company offered him a better job — and a big raise.

When he said yes, it set off a three-year legal battle that concluded this past week but wiped out his savings along the way.

“I tried to get a better life for my wife and my son, and it backfired,” said Mr. Bollinger, who is 53. “Now I’m in my mid-50s, and I’m ruined.”

I’m generally don’t take sides in the non-compete battlefield; I’ll represent anyone. But I do feel that there should be a line below which covenants should not be applied. Even if I have to agree with Judge Smails on some level.

 

 

(H/T to The New York Times)

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