In continuing the blog series on the new Georgia non-compete law, we will now discuss the application in our firm’s recent case that involved a license agreement whereby independent contractors were hired to coach small children at the children’s schools. Specifically at issue was whether the agreements signed by the instructors prevented them from working for a competing business that provided similar coaching programs to small children. The agreements were signed after May 11, 2011 and therefore are subject to the new law.
Of particular concern with the agreements were 1) the duration, and 2) the scope of activity. The duration of the agreements was for a period of three (3) years after the term of the agreement. As previously mentioned, under the new law, Georgia courts will presume anything over 2 years in duration is unreasonable. Furthermore, the agreements stated that the subcontractor could not engage in business “in any way, including but not limited to, as owner, instructor, manager, or consultant…” Under the old law, the language “in any way” would have rendered this agreement unenforceable.
Although, thankfully for our client, this case and these agreements did not have to go before a court for interpretation, it is reasonable to assume that a Georgia court would find this language unreasonable even under the more relaxed rules of the new law. Considering that these instructors merely provided coaching to children ranging in age from approximately 3-5 years old, it is probably unreasonable to prevent the instructor from engaging in business in any way to a similar business as the employer, including as an owner, instructor, manager, or consultant. Doing such would prevent the instructors from acting in any capacity, as a coach or otherwise, in a business that was similar to the employer. Theoretically, the instructors would have been prevented not only from acting as an instructor or coach but would also be preventing from acting as an accountant, a custodian, or security personal, just to name a few, as long as the employment was with a similar business.
Remember, while this agreement would have definitely been stricken under the old law and considered unenforceable, under the new law, a Georgia court could go in and “blue-pencil” the agreement and tailor it to
- protect the legitimate business interest and
- realize the original intent of the agreement.