This Wisdom of the Crowd, compiled from questions and responses posted on the Employment & Labor Forum,* addresses whether in the state of Georgia, in the United States, recognizes the validity of non-solicitation provisions.
*(Permission was received from the ACC members quoted below prior to publishing their Forum Comments in this Wisdom of the Crowd resource.)
Question:
My company received a Cease and Desist Letter from an ex-employer of one of our new employees in Georgia, stating that the same employee was bound under Non-Solicitation of their employees for a period of 1 year from the termination of his employment with them (they call it "no-hire" clause) and that he breached it (3 other employees left that company and moved to our company).
The letter was addressed to the company and the employee.
I'm trying to understand if Georgia recognizes the validity of non-solicitation provisions? Also, what are the risks/exposure or implications to my company?
How should we deal with this? The ex-employer pushes us to reply within 2 days. What should we argue against it?
Wisdom of the Crowd:
Response #1: Georgia does enforce non-solicitation clauses. The exposure is when the company goes after the hiring company for tortious interference. Damages include all damages that are proximately caused by the breach.
Have you taken a look at the clause to see if it was breached? Also, I have not looked at Georgia recently, but generally there often needs to be some knowledge or intent. There is not a requirement that you formally respond in 2 days but you can let them know you are responding by confirmation of receipt of the letter and are looking into the issue. Then determine your exposure, whether the employee did actually solicit the other employees (versus your company hiring them through normal channels), and how much those employees are worth to the company.1Response #2: I can't address Georgia law specifically, but in California, many employers take the position that the non-solicitation clauses are enforceable. The accusation is that the employee who left is now soliciting his/her former colleagues. That is often not the case - a capable leader attracts capable employees wanting to work with the leader once again. So, we take the position that anyone who applies to a general advertisement or solicits us for employment (even if it comes through the initial employee) is fair game. It may be wise to firewall the initial employee from the selection process for subsequent hires from that employer. Further, depending on the facts, I think it is a reach for the former employer to argue that the current employer is bound by a restriction between the departed employee and former employer.2Response #3: First, I'd like to disclose that I practice law in Texas not Georgia. However, it seems to me that any demand requires a reasonable response time, not 2 days. Also I'm not certain as to Georgia law, however in Texas, the ex-employer's 'cease and desist' notice related to a non-solicitation/no hire agreement with your new employee (not your company) is of no legal effect against your company since this would only apply to your company if the agreement with this provision was between the ex-employer and your company. This is seen in many technical/Information Technology supplier contracts where the employee will work or access on-site facilities. If the agreement is between the ex-employer and your new employee as I interpret your factual circumstances, then it would only be enforceable if your new employee hired the 3 other employees to work for a company owned by your new employee and not simply because your new employee convinced others to follow if this is 'at will' employment. What the ex-employer may have intended to sign with each of its ex-employees was a 'no compete' agreement if your company is a competitor of the ex-employer. In that event, the ex-employer would have certain legal remedies in which it could avail itself.3
______________________ 1Andrea Gehman, Senior Associate General Counsel, The Johns Hopkins University Applied 2Physics Laboratory, Maryland (Employment & Labor Law, June 30, 2016).
2Anonymous Poster (June, 2016).
3Anonymous Poster (June, 2016).
Region:
United States
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