Upcoming Georgia Referendum: Constitutional Amendment Related to Non-Competes

The referendum that will be on the November ballot will ask voters:

“Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?”

When I read it my first response was, “Sure, why not?”. Then I read it again and the question seemed to be formulated to elicit a “yes” – particularly so when I had no clue what it meant or what its impact would be. So I decided to do a bit of reading on the topic and found this excellent article by Ben Fink, an experienced lawyer specializing in this area.

The author draws this conclusion after a point-by-point analysis, but you can draw your own:

“there is no question that the law in Georgia needs to be modernized to allow employers greater protections, when appropriate. However, the new legislation seems to go well beyond what is necessary to accomplish this goal. The new legislation also runs contrary to a trend taking hold in other states with which Georgia would like to compete. In Massachusetts, the legislature is very carefully studying the issue before acting. While the Georgia legislature purports to have done so, it does not appear to these observers that the Georgia legislature has even scratched the surface of the various perspectives that should be considered, or that it spent the time and energy necessary to truly determine what is best for business in Georgia.”

Suppose that an ex-employee is taken to court by a Georgia employer because the employee joins a competitor or provides services prohibited by the non-compete agreement. Today, a non-compete agreement in Georgia is either honored in full or thrown out in full, if deemed unlawful. So the ex-employee knows the possible outcomes he/she is dealing with. If this amendment passes, new rules will let a judge re-write the non-compete agreement if parts of the agreement are deemed unlawful. Essentially, that means that the ex-employee will not know where he could work and what he could do until after the judge has decided what is fair.

Under the new rules, signing a non-compete agreement will be like signing a blank paper should parts of the agreement turn out to be unlawful.

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