Questions about the legality and application of noncompete agreements restricting former employees generated a great deal of legal activity during 2024. At both the federal and state levels, major developments occurred, which could have significant effect on Georgia workers and companies. With a change of administration in Washington, D.C., many observers believe that there more big news on noncompete agreements will be forthcoming in 2025.
In April 2023, the Federal Trade Commission’s (FTC) approved a ban that would have invalidated nearly every restrictive covenant limiting where a former employee can work. That decision prompted numerous lawsuits from businesses. Subsequently, a federal court in Texas blocked the rule’s implementation, prompting the FTC to appeal in the 5th Circuit. Another ruling against the ban in the 11th Circuit has similarly been appealed. In contrast, a federal judge in Pennsylvania sided with the government, creating a mixed legal landscape.
Analysts have raised the possibility that a second Trump administration is likely to adopt a less aggressive regulatory stance, potentially resulting in a withdrawal or modification of the rule prohibiting noncompete agreements. Supporters of the ban on restrictive covenants claim that they limit workers’ mobility and suppress wages by restricting their ability to seek better opportunities. Meanwhile, businesses worry that without the ability to enforce noncompete agreements, they might lose the competitive edge they’ve earned when an ex-employer takes proprietary and customer information to their new company. Some say that President Trump’s background as a business owner known for frequently using nondisclosure agreements could also spur change to the FTC’s position.
During 2024, the Georgia Supreme Court also weighed in on the structure and enforcement of noncompete agreements. In North American Senior Benefits, LLC v. Wimmer, the justices held that these contracts do not have to contain a specific geographic restriction to be enforced within the state. However, the area in which someone is barred from working must be reasonably drawn.
For businesses and employees alike, the uncertainty surrounding restrictive covenants heading into 2025 means that you should remain aware of the latest developments. Whether you’re drafting a noncompete agreement, being asked to sign one or are involved a noncompete enforcement action, speaking with a knowledgeable Georgia attorney should be your next step.
The Reddy Law Firm, P.C. in Alpharetta provides comprehensive counsel to Georgia employers and employees on issues relating to noncompete agreements. To discuss your issue with a qualified attorney, please call 678-629-3246 or contact us online.
