Restrictive covenants come up in almost every kind of business relationship I work on — employment agreements, agreements for the sale of businesses, franchise agreements, and even commercial leases. Clients often use the term “non-compete” as shorthand for all of them, but that’s really just one piece of a larger picture.
Restrictive covenants are still widely used today, and the law governing them is still in flux. Georgia has its own statute governing how they can be written and enforced. The courts continue to interpret that statute, issuing decisions that don’t always appear to agree with one another. At the federal level, the FTC tried, and then abandoned, a nationwide ban on most non-compete agreements, and has now shifted over to challenging individual employers’ agreements.
Given how often this topic comes up, and with how much has changed even in just the past year or two, it seemed like a good time to cover the basics.
What Counts as a Restrictive Covenant
“Restrictive covenant” is really an umbrella term. It refers to any contract provision that protects a business’ legitimate interests, such as its customer relationships, confidential information, or workforce, by limiting what a party can do during or after the conclusion of its relationship with such business. The most common types include:
- Non-compete agreements — restricting someone from working for or starting a competing business
- Non-solicitation agreements — restricting someone from soliciting customers, clients, or employees after they leave
- Non-disclosure and confidentiality agreements — protecting trade secrets and other confidential business information
These provisions show up in employment agreements, but they are just as common and often enforced more readily in the sale of a business, where a buyer is paying, in part, for the assurance that the seller won’t turn around and compete against the very business just sold.
Georgia’s Restrictive Covenant Act: The Basics
Georgia has a somewhat unusual history with restrictive covenants. For decades, Georgia courts were openly hostile to them, applying a strict, all-or-nothing standard that struck down an entire agreement if any part of it was overbroad.
That changed with the Georgia Restrictive Covenant Act (GRCA), codified at O.C.G.A. § 13-8-50 et seq., which took effect on May 11, 2011 after Georgia voters approved a constitutional amendment authorizing it. The GRCA gave Georgia courts more flexibility, including the ability to “blue pencil” — or modify — an overbroad covenant rather than throw the whole thing out.Agreements signed before May 11, 2011 are still governed by the older, stricter rules.
The statute also identifies presumptively reasonable time periods for enforceability of the covenants depending on the context: generally up to two years for employees, up to three years for franchisees and distributors, and up to five years (or the length of any payout period, if longer) for business owners who sign a restrictive covenant as part of selling their business.
None of this means restrictive covenants are automatically enforceable in Georgia. They still need to be reasonable in time, geographic scope, and the scope of restricted activity—and the reasonableness is still very much litigated.
The Courts Are Still Working Out the Details
Even with a statute in place, Georgia courts continue to wrestle with how far a covenant can go. One issue that has come up repeatedly is what’s sometimes called “in any capacity” language — a covenant that prohibits a former employee from working for a competitor in any role at all, rather than limiting the restriction to the specific work that employee actually performed.
In 2025, the Georgia Court of Appeals issued two decisions on this issue that are difficult to square. In All States AG Parts, LLC v. Herzig, the court refused to enforce a non-compete that barred a former sales employee from associating with a competitor “in any capacity,” and it agreed the clause could not be saved by striking that phrase, because what remained (a ban on “engaging in” a similar business) still did not identify any specific restricted activities. The court also affirmed the trial court’s decision not to rewrite the covenant, a reminder that a court’s power to modify an overbroad covenant is discretionary, not guaranteed. Six months later, in Falcon Ridge, Inc. v. Leon, a different panel held that a covenant barring a former contractor from “engag[ing] in” a similar business, or from owning, managing, or consulting for a competitor, gave a sufficient description of the prohibited activities under the statute. The practical takeaway is that Georgia courts are not applying a bright-line rule here, and outcomes can depend heavily on how a particular covenant is drafted. Employers should not assume that a restrictive covenant is enforceable simply because it resembles language used elsewhere or was fine a few years ago.
The Federal Landscape Adds Another Layer
Beyond Georgia law, business owners should be aware of what has been happening at the federal level. In April 2024, the Federal Trade Commission issued a sweeping final rule that would have banned most non-compete agreements nationwide. That rule never actually took effect — a federal court in Texas set it aside nationwide in August 2024, finding the FTC had exceeded its authority — but that has not been the end of the story.
In September 2025, the FTC dropped its appeals and accepted that the rule is dead, and the rule has since been formally removed from the federal regulations. But the agency has not stepped away from the issue. It has changed its strategy to challenging individual employers’ non-competes as unfair methods of competition, focusing mostly on companies that imposed broad non-competes across their entire workforce, including an April 2026 action against Atlanta-based Rollins, Inc., the parent company of Orkin. For now, there is no federal ban in place, and Georgia’s own statute continues to govern most restrictive covenants involving Georgia employees. But a blanket non-compete applied to every employee, regardless of role, now carries federal risk as well as state-law risk, and this is an area worth watching, particularly for businesses that operate across multiple states.
Practical Guidance for Business Owners
Given how often the legal landscape shifts, here is what I generally recommend to clients:
- Review existing agreements periodically. A restrictive covenant that was properly drafted several years ago may no longer reflect current law or the realities of the role it’s meant to protect.
- Tailor covenants to the specific role or transaction. A generic template is far more vulnerable to challenge than a covenant narrowly drafted around the actual customer relationships, confidential information, or competitive risk at issue.
- Understand the difference between employment and sale-of-business contexts. Courts generally give more latitude to covenants tied to the sale of a business than to ordinary employment relationships.
- Don’t assume a covenant is enforceable just because it’s signed. Georgia courts will still scrutinize scope, duration, and geographic reach.
- Confirm the employee is someone a non-compete can cover. Georgia limits postemployment non-competes to salespeople, managers, key employees, and professionals. For other employees, a well-drafted customer non-solicitation and confidentiality agreement is usually the better tool.
- Don’t count on a court to fix an overbroad covenant. Georgia courts can modify an overbroad covenant, but they don’t have to, and they have declined to when the fix would amount to a rewrite. Draft the restricted activities precisely from the start.
- Watch what new paperwork replaces. In Herzig, a later offer letter with a merger clause, but no restrictive covenants, wiped out the employee’s earlier non-compete. When issuing new offer letters or agreements after a promotion or acquisition, make sure existing covenants are carried forward or expressly preserved.
The Bottom Line
Restrictive covenants remain a valuable tool for protecting a business’s relationships, confidential information, and goodwill — but they only work if they are drafted with the current legal landscape in mind. Between an evolving body of Georgia case law and renewed federal enforcement against overbroad non-competes, what qualified as a defensible covenant a few years ago may not hold up today.
If you have questions about your company’s restrictive covenants — whether you’re drafting new agreements or reviewing ones already in place — our Business & Corporate Law and Employment Law teams can help. Contact us to schedule a consultation.