In a recent landmark decision, the Georgia Court of Appeals addressed the enforceability of employee non-solicitation agreements, creating significant implications for employers in the state. The case, North American Senior Benefits, LLC v. Wimmer, 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. As such, this ruling will reshape how employers in Georgia approach and draft their non-solicitation provisions.
Background and the Restrictive Covenants Act:
The case at hand revolved around a restrictive covenant between Alisha and Ryan Wimmer, former employees of North American Senior Benefits (“NASB”), an independent insurance marketing organization.
The Wimmers entered contracts with NASB to serve as insurance agents. The contracts contained non-solicitation-of-employees restrictive covenants that prevented the Wimmers, during the terms of their contracts and for two years after termination, from employing any employee of NASB. The Wimmers terminated their contracts in June 2021, and at some point, formed Freedom & Faith, Inc., which operates in the same industry as NASB.
In response, NASB filed suit against the Wimmers and Freedom & Faith, asserting claims for tortious interference with contractual and business relations; breach of contract; and breach of the covenant of good faith and fair dealing. The defendants answered the complaint and filed counterclaims, alleging breach of contract, fraud, and negligent misrepresentation, and seeking a declaration that the non-solicitation restrictive covenant was invalid and unenforceable.
After a hearing, the state-wide business court found that the non-solicitation covenant was void and unenforceable because the covenant contained no territorial restraint whatsoever. As such, the court ruled in favor of the Wimmers, and permanently enjoined NASB from attempting to enforce the covenant as to post-termination conduct.
In reviewing the covenant, the court looked to Georgia’s Restrictive Covenants Act (“RCA”), which provides the legal framework for post-employment restrictive covenants. Under the RCA, no contract provision that “restrict[s] competition” can be enforced unless it is “reasonable in time, geographic area, and scope of prohibited activities.” However, the Wimmers’ non-solicitation restrictive covenant did not contain an expressly stated geographic area.
In response, NASB argued that the statute should be read to require only that any geographic restrictions be reasonable under the circumstances, that the restriction at issue was reasonable, and that it should be deemed enforceable. However, the court did not agree.
The Court’s Decision:
In a 2-1 decision, with one judge concurring and one dissenting, the appellate court held that employee non-solicitation agreements must incorporate an explicit geographic limitation to be considered valid under Georgia law. It also made it clear that the carve-outs for non-solicitation of customers and trade secrets did not apply to employee non-solicitation agreements.
Furthermore, the court rejected the notion of “blue-penciling,” an approach often used by courts to modify restrictive covenants to make them enforceable. Instead, the court upheld the lower court’s decision that adding a material term, like a geographic limitation, would be beyond its purview and would constitute an improper modification.
The ruling has far-reaching implications for Georgia employers as it necessitates a fundamental change in how non-solicitation agreements are drafted and enforced. Many existing non-solicitation clauses, which have traditionally prohibited solicitation of any employees without a specific geographic limit, may now be unenforceable.
The Future Landscape for Georgia Employers:
The Wimmer decision might not be the final word on this matter. It is possible that the Georgia Supreme Court may review and potentially overturn this ruling, or the Georgia Legislature may amend the RCA to specifically address the issue. However, until something changes, this case must be considered.
As such, Georgia employers should act soon to review non-solicitation provisions with a knowledgeable local employment attorney. Additionally, employers in Georgia should consider revising existing non-solicitation clauses to incorporate appropriate geographic limitations.
While the court’s ruling did not specify what would be considered reasonable in terms of geographic limitation, it is reasonable to define a geographic area relevant to the business’s operations or where the employee had significant involvement. This proactive approach will hopefully help safeguard businesses from potential disputes and increase the likelihood of successfully enforcing their non-solicitation agreements.
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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://
