Jimmy Buffett once eloquently said that “without geography, you’re nowhere.”  But how does that insight apply to restrictive covenants that lack explicit geographic limitations in Georgia? While Jimmy never got to find out, we now have some much needed clarity from the Georgia Supreme Court.

For many years, most Georgia litigants, individuals, and businesses operated under the assumption that some restrictive covenants did not need to contain an explicitly defined geographic limitation to be deemed “reasonable” in terms of “geographic area” because O.C.G.A. § 13-8-53(a) of the Georgia Restrictive Covenants Act (“GRCA”) did not include such a requirement. That longstanding belief was called into question last year, however, when the Georgia Business Court ruled that North American Senior Benefits, LLC (“NASB”) could not enforce an employee non-solicit covenant  because the provision lacked an explicit geographic limitation.  On appeal, the Georgia Court of Appeals affirmed the lower court’s ruling. In so doing, it primarily relied upon and adopted the holding in CarpetCare Multiservices v. Carle, 347 Ga. App. 497, 819 S.E.2d 894 (2018), which voided a customer non-solicit because it did not include an explicit geographic limitation.

NASB appealed the Court of Appeals’ decision to the Georgia Supreme Court. Technically, the question certified by the Supreme Court was limited to whether an employee non-recruit must include an explicit  geographic area to be “reasonable” under the GRCA.

Last week, the Georgia Supreme Court unanimously reversed the Court of Appeals’ opinion in North American Senior Benefits, LLC v. Wimmer et al., No. S23G1146 (Ga. 2024), holding that an employee non-solicit covenant does not need to contain an explicit geographic limitation to be considered “reasonable” in terms of “geographic area,” as required by the GRCA.  In its opinion, the Georgia Supreme Court also rejected the prior CarpetCare ruling, noting that the “plain text” of O.C.G.A. § 13-8-53(a) does not require a restrictive covenant to contain a precise, defined “geographic area.” Instead, the statute only mandates that the applicable “geographic area” (be it expressly defined or merely implied) be “reasonable.” Based on this analysis, the Supreme Court also held that the Statewide Business Court “must assess whether the provision’s geographic scope is reasonable in light of the totality of the circumstances including, but not limited to, the total geographic area encompassed by the provision, the business interests justifying the restrictive covenant, the nature of the business involved, and the time and scope limitations of the covenant.”

Notably, the Georgia Supreme Court’s opinion in Wimmer contains additional analysis and direction beyond merely how Georgia courts should rule on geographic limitations contained in an employee non-recruit provision. The Georgia Supreme Court also addressed O.C.G.A. § 13-8-53(c), which concerns situations “whenever a description” of a “geographic area” is required, and held that despite this subsection, “there are times when [a defined geographic area] is not required” opening up its holding to clauses past just employee non-solicits.

Jimmy Buffett also famously said, “indecision may or may not be my problem.” Well, with this Georgia Supreme Court ruling, we can now move forward with some much needed certainty on an important issue for many employees and employers (maybe even sailors and Parrot Heads?).