On September 6, 2023, the Georgia Supreme Court reaffirmed that Georgia courts must first determine whether a restrictive covenant is enforceable under Georgia law before applying a foreign choice-of-law provision. It seems that courts in Georgia are particularly focused on restrictive covenants lately, as this decision closely follows the Georgia Court of Appeals decision North American Senior Benefits, LLC v. Wimmer, where the court clarified the necessity of including an explicit geographic limitation in employee non-solicitation agreements in order for them to be deemed enforceable under Georgia law.
Similarly, in Motorsports of Conyers, LLC v. Burbach, the Georgia Supreme Court clarified that before a Georgia court can enforce a restrictive covenant in a contract calling for the application of foreign law, the Georgia court must first determine that the restrictive covenant is “reasonable” under Georgia’s Restrictive Covenant Act (GRCA). Georgia’s Supreme Court also explained that where a restrictive covenant is unreasonable under the GRCA, it is in violation of Georgia’s public policy, and, therefore, it cannot be enforced by applying the foreign choice-of-law provision.
To help further understand this evolving topic, we take a deeper dive into Georgia’s approach to restrictive covenants and choice of law provisions below.
Georgia’s Stance on Restrictive Covenants
Historically, Georgia courts have maintained a strict stance when it comes to enforcing restrictive covenants against Georgia employees. Regardless of whether an employment contract includes a choice-of-law provision designating another state’s law, Georgia courts insist on first determining whether the restrictive covenant complies with Georgia law, particularly the GRCA..
The Motorsports of Conyers, LLC v. Burbach Case
In the case of Motorsports of Conyers, LLC v. Burbach, the Georgia Supreme Court clarified this principle. The court’s ruling emphasized that before a Georgia court can enforce a restrictive covenant governed by foreign law (foreign, in this case, meaning the law of another State), it must first confirm whether the covenant is “reasonable” under the GRCA. If a restrictive covenant is found to be unreasonable under the GRCA, it is deemed to be in violation of Georgia’s public policy and is therefore void and unenforceable, irrespective of the presence of a foreign choice-of-law provision in the agreement.
The crux of the issue in the Motorsports case was that the trial court had applied a Florida choice-of-law provision without initially assessing whether the restrictive covenants in question complied with the GRCA. This decision was later overturned by the Georgia Court of Appeals, which correctly recognized that evaluating compliance with the GRCA is the first step in determining whether the public-policy exception overrides the choice of foreign law.
Georgia Law as the Touchstone
The Georgia Supreme Court affirmed this reversal and clarified that while the GRCA has introduced a more flexible approach to applying foreign law to restrictive covenants in Georgia than previous common law, Georgia law remains the “touchstone” for any analysis involving these covenants.
In summary, if a Georgia court deems a restrictive covenant to be reasonable under the GRCA (in terms of scope, duration, or geographic reach), it may proceed to apply the foreign law specified in the choice-of-law provision to determine whether to enforce it. Conversely, if the court finds the covenant unreasonable under the GRCA, foreign law cannot be applied, and the contract will be governed by Georgia law. Importantly, under Georgia law, there is also the possibility of modifying the restrictive covenant to make it reasonable and partially enforceable, a process known as “blue-penciling.”
Implications for Employers
The Motorsports case carries significant implications for employers in Georgia. It underscores the importance of drafting restrictive covenants that align with Georgia law and standards, even if the contract includes a foreign choice-of-law provision. Employers should consider revising any restrictive covenants applicable to Georgia employees that do not meet the criteria set by Georgia law. The failure to do so could render these agreements unenforceable, regardless of the choice-of-law provision.
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About Harrison Oldham
Harrison grew up in Mansfield, Texas. He attended Texas A&M University for his bachelor’s degree, where he met his wonderful wife, Kelsey. After graduating magna cum laude from Texas A&M, he attended SMU Dedman School of Law, graduating with honors in 2012. Today, Harrison and his wife live in Dallas, Texas with their son, Teddy.
Since graduating from SMU Law, Harrison has worked exclusively in the field of business law. He has spent time in private practice and in-house, working with clients of every size; from single person startups to Fortune 250 companies. Today his practice focuses on serving the diverse needs of businesses and individuals throughout Texas. You can learn more about Harrison by visiting his website, at: http://