As previously mentioned, there are currently 45 state bills pending to modify noncompete law across 21 states — as well as two new federal bills, a Washington, D.C. bill, President Biden’s plan to limit the use of noncompetes, and the FTC’s consideration of regulatory limitations.
In this series, we are providing details on all 45 bills (and any new ones that are filed) — and we will be simultaneously updating our Changing Trade Secrets | Noncompete Laws page. Note that the summaries are (sort-of) color coded for the nature of the bill (ban, modification or establishment of standards, reversal of prior changes) and the groups for whom it creates exceptions or specific limitations (medical, low-wage workers, others).
Off we go…
Up today: Georgia. (We’re going alphabetically, in case you were wondering.)
Georgia has one pending bill. It applies to any “covenant that restricts competition after the term of employment” and is focused on fairness issues, i.e., notice and wage exemptions.
Introduced on February 8, 2021, HB.332 (A BILL TO BE ENTITLED AN ACT To amend Article 4 of Chapter 8 of Title 13 of the Official Code of Georgia Annotated, relating to restrictive covenants in contracts, so as to prohibit covenants in agreements between employers and low-wage employees that restrict competition after the term of employment; to require employers to provide prior notification to employees and prospective employees whose employment is conditioned upon the acceptance of a contract containing such covenants; to provide courts with the power to use competition restrictions as remedial measures; to provide for related matters; to provide for an effective date and applicability; to repeal conflicting laws; and for other purposes).
Yes, that is the actual title of the bill.
And, if it’s not clear from the title, the bill would:
- Require employers who plan to require a restrictive covenant from an employee to provide written notice to the employee or prospective employee.
- For prospective employees, the notice must be provided “[p]rior to making an offer of employment that will require the acceptance of a contract containing a covenant that restricts competition after the term of employment,” and the employer must “provide the prospective employee with a written statement that employment is conditioned upon the execution of a contract containing such a restrictive covenant.” (Emphasis added.)
- The notice must be in writing and provided at least seven days before the contract is required to be signed.
- The notice needs to “communicate that the employee may consult with an attorney and negotiate the terms of the contract, if the employee or prospective employee wishes to do so.” (Emphasis added.)
- Failure to provide the required notice will render the covenant void and unenforceable.
- Establish that “[n]othing contained in this subsection shall be construed as excusing the employer from providing fair and adequate consideration to an employee whose continued employment is conditioned upon the execution of a contract containing a covenant that restricts competition after the term of employment.”
- Ban noncompetes in agreements with low-wage workers (meaning those earning less than $17.00 per hour or $35,360 annually) and unpaid interns and volunteers (if the intern or volunteer does not have access to trade secrets).
- Adopt the springing noncompete concept reflected in the Massachusetts Noncompetition Agreement Act — i.e., a judicially imposed noncompete as a remedy for a breach of another less-restrictive, restrictive covenant (e.g., a nonsolicit or NDA) or a violation of other legal obligations. Unlike Massachusetts law, however, this bill states that the parties’ contract must expressly authorize the springing noncompete.
- Apply prospectively only, i.e., it will not apply to noncompetes entered before the effective date.
The bill is pending before the House Industry and Labor Committee.
Next up: Illinois.
And, remember, if you want to see a summary of the current noncompete law in any state (and D.C.), please refer to our 50-state noncompete chart, which is updated on a continual basis, as the laws change.
*A huge thank you to Erika Hahn for all of her extraordinary help in tracking the bills.