New blue-penciling law will increase scope of uncertainty
As a long-time practitioner in the area of restrictive covenants, I am keenly interested in the debate over the proposed new legislation most recently addressed in the letter from Cary Ichter published on June 25 in the Daily Report.
I have advocated for employers and employees in connection with restrictive covenants and well understand the issues and interests of each. I have no particular bias toward one side or the other. However, I am in agreement with virtually all of Mr. Ichter's views.
The statute at issue, which would provide for blue-penciling, will bring anything but certainty to the area. It will indeed bring greater uncertainty than exists today. Just some of the many questions: Will the court revise the covenant? If so, how will it revise the covenant? Will the same covenant be revised in the same manner in different courts, by different judges within the same court, and in the same way for different former employees of the same employer under the same covenant?
In their well-written article in the December 2009 issue of the Georgia Bar Journal, Erika C. Birg and others correctly identify several issues with the current state of Georgia law on restrictive covenants, including the fact that, at times, it would appear that employers need to be "fortune tellers" in trying to determine the proper scope of a covenant. The fact is, however, that this will be true for employers and employees alike under the proposed new law. The scope of uncertainty will only increase.
There are cases where the result seems at odds with reason. That happens in every area of the law from time to time. The answer is not to enact legislation that is at cross purposes with the stated objective and will only make matters worse.
As one who not only litigates but also drafts restrictive covenants, there is no question that current Georgia law causes an employer's counsel to think twice about the legitimate business interests the client really needs to protect and how to do so in a limited but effective manner. Enactment of this law will likely eliminate any reason for employers' counsel not to yield to the temptation to overreach, because counsel will simply assume that the covenant will either not be challenged or that it will, at worst, be pared down.
Where I tend to disagree with Mr. Ichter is in his concurrence with Rep. Kevin Levitas that limiting application of restrictive covenants to non-key employees has merit. My experience has been that non-key employees can cause as much, if not more, havoc for their former employers as so-called key employees. Moreover, this new distinction is likely to create litigation over an issue that did not even exist before: whether the former employee was, in fact, a key employee within the statute.
Employers and employees alike have legitimate interests that can and should be protected. Current Georgia law that attempts to do so has many flaws. They are eclipsed by the flaws of this new legislation.
Fredric Chaiken, Special to the Daily Report