Passage of amendment will affect non-compete deals

By April Hunt

The Atlanta Journal-Constitution

Georgia voters this week made a major change in how non-compete agreements can be enforced.

More than 1.6 million Georgians approved Amendment 1. It adds exceptions to language in the Georgia Constitution that bars legislation “from defeating or lessening competition.” This would allow courts to modify agreements between firms and their workers instead of accepting or rejecting them outright.

Supporters argue that 68 percent of voters agreed because the change will help draw and keep business in Georgia.

“If we can make a company comfortable enough to bring their key positions here, the rank-and-file jobs come with it,” said Brad Alexander, a consultant for Jobs of Tomorrow.

That group, backed by the Georgia Chamber, ran its campaign on the jobs argument, which voters supported.

But opponents claim the measure -- which asked the question, “Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements” -- actually decreases competition.

“This only benefits employers who don’t want competition,” said Ed Buckley, an employment attorney in Atlanta. “Employees will be sort of captive, and the workplace does not benefit by that.”

Neighboring states, including Florida and North Carolina, already have similar labor laws on their books.

State Rep. Kevin Levitas, the Atlanta Democrat who led the legislative battle, said those laws protect businesses from being betrayed by former employees who violate non-compete deals by using confidential information in new jobs or in their own startups.

The law took effect in Georgia on Wednesday, because of legislation that passed earlier this year, supporting the amendment change.

The state has debated the question for decades. The Georgia Assembly tried to enact a law on the matter before, only to see the state Supreme Court strike it down as unconstitutional in 1991.

That’s why the constitution had to be changed, said Jason D’Cruz, an employment attorney with Morris, Manning & Martin in Atlanta.

The change also lets the courts decide on the restrictions in any non-compete deals, giving judges the power to whittle down any restrictions until they are considered reasonable, said D’Cruz, who did not take a position on the amendment.

“Some people think it’s detrimental to employees. The backers make the case it’s better,” D’Cruz said. “Actually, it is a sea change in how [these deals] are drafted and enforced for everyone.”