One way in which employers strive to protect their trade secrets is by including a noncompete clause in employment contracts. Their aim is to prevent situations where employees leave the business, get a job with a competitor and share confidential information with their new boss.
In Georgia, noncompete agreements must meet certain requirements in order to be valid. The law also restricts the types of employees whose post-employment activities an employer may limit.
A fundamental principle of contract law is that there must be an exchange between the parties. Thus, one party promises to do something or refrain from doing something in exchange for something from the other parties. A unilateral promise to perform an action may not be enforceable as a contract.
Based on this principle, Georgia courts require employers to provide consideration in exchange for the noncompete agreement. In the case of a new employee, promising employment may suffice to fulfill this requirement. Companies that are updating agreements for existing employees may need to offer a raise or other benefit in exchange for signing the noncompete. Simply extending current employment may fall short.
Protection of business interests
Employers should also structure noncompetes to specifically protect reasonable business interests. An overly general or vague agreement may not stand up in court. Generally, the agreement should aim to prevent the disclosure of materials that fall under the rubric of trade secrets or proprietary information.
The noncompete provisions should also be reasonable. Georgia courts are more likely to enforce a contract that specifies geographic location, time period and types of activity. All of these should also have a reasonable connection to protecting business interests. In addition, any provision that violates Georgia or federal law will not stand up.
If a court finds a particular provision is unenforceable, it may choose to cut out that part and enforce the rest of the contract. As is the case with other types of contracts, some types of contracts may be completely void, in which case the court may approach the matter as if the contract did not exist.