Georgia employment contracts held unenforceable by court of appeals
The Georgia Court of Appeals recently had to determine if certain non-disclosure and non-compete agreements were unenforceable due to their broad language. It found the covenants to be unenforceable, since the non-disclosure covenant attempted to restrict employee observations with no time limitation and the non-compete covenant failed to include specific activities.
In Global Link Logistics Inc. v. Briles, the plaintiff, Briles, signed an employment agreement in 2006 with Global Link. The agreement contained a non-disclosure and a non-compete covenant. The non-disclosure covenant prohibited Briles from revealing “the information, observations, customer and vendor relationships and data obtained by him while employed by the Company.” This covenant provided for no time limitation. The non-compete covenant prohibited Briles from engaging in any competitive business for two years after leaving Global Link, and it also prohibited him from soliciting any customers, suppliers, or employees.
Briles quit Global Link and began work for a competitor in 2007. He brought an action for injunctive and declaratory relief in regards to the covenants as well as a claim of defamation. Global Link moved to force the parties to enter into arbitration; however, the trial court held the covenants unenforceable after an evidentiary hearing. Global Link appealed that decision.
The Georgia Court of Appeals noted that covenants are only upheld when they are strictly limited in time and territory and are reasonable considering the interests of a particular business.
First, the court turned to the non-disclosure covenant. It found that the covenant prohibited Briles from using his own observations in any future job for an indefinite amount of time. Explaining that Global Link failed to provide any supporting authority for such an expansive limitation, the court found the covenant to be overbroad and unenforceable.
The court then examined the non-compete covenant. The general rule is that a non-compete covenant must specify the particular acts which a former employee is prohibited from engaging in for it to be upheld. The court reasoned that the covenant barred Briles from engaging in any competitive business without specificity, and that such a covenant could not be upheld.
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