Out with the Old Restrictive Covenants, In with the New

Several states, including Georgia and Texas, have changed the way they address unfair competition laws, including those regarding restrictive covenants and trade secrets. While these changes may be “old news” to companies that are located in or otherwise employ individuals in these States, the impact of these changes has never been more relevant, and many companies have failed to take advantage of the new protections they afford. In fact, all companies, regardless of their location or that of their workforce, should regularly review their restrictive covenants and the applicable law to ensure they have the appropriate protections in place.

For example, Georgia employers (or companies with restrictive covenants governed by Georgia law) are those most likely in need of a restrictive covenant review, as the recent changes in this State have been sweeping. Namely, employment agreements entered into after May 11, 2011, are governed by the new Georgia Restrictive Covenants Act, O.C.G.A. §§ 13-8-50 et seq., which drastically overhauled Georgia's law in a way that makes these agreements easier to enforce. As a result, Georgia employers should strongly consider utilizing restrictive covenants for the first time or replacing pre-May 11, 2011 employment agreements with new agreements.

Similarly, Texas recently enacted its own Uniform Trade Secrets Act (“TUTSA”), which became effective September 1, 2013. Primarily codifying Texas's trade secret law, TUTSA both strengthens trade secret protections and provides enhanced certainty to misappropriations claims. Therefore, Texas employers likely need to reconsider their employment agreements, updating the provisions addressing the confidentiality of company trade secrets.

Whether you are located in Georgia, Texas, or elsewhere, please contact your Elarbee Thompson attorney to discuss possible changes to your company's employment agreements.