Prior to the enactment of Georgia’s Restrictive Covenant Act (“GRCA”), Georgia courts uniformly struck down non-compete provisions that used “in any capacity language”, i.e., a non-compete that prohibited an employee from working for a competitor in any capacity and not limited to the services that the employee performed for his former employer. Recently, in All States AG Parts, LLC v. Herzig (February 2025), the Georgia Court of Appeals followed the pre-GRCA rationale and struck down what it deemed to be an overbroad non-compete.
In All States, the employer All States AG Parts (“ASAP”) provided replacement parts for agricultural and construction equipment. ASAP employed Mr. Rose in Outside Sales. Mr. Rose resigned his employment with ASAP and began working for a direct competitor. When ASAP sued Mr. Rose, he argued that the non-competition provision in his employment agreement was overbroad. The trial court agreed, and the Court of Appeals upheld the trial court’s determination.
The All States Court recognized that the GRCA provided a “more permissive scheme” than its predecessor common law for construing and enforcing restrictive covenants. Yet, under the GRCA, like the predecessor law, non-compete covenants are enforceable if they are “reasonable in time, geographic area, and scope of prohibited activities.” O.C.G.A. § 13-8-53(a). And any restrictive covenant not in compliance with the statute “is unlawful and is void and unenforceable.” O.C.G.A. §13-8-53(d).
The non-compete at issue provided that Mr. Rose could not, for a limited time period, “be employed by, perform services for, or otherwise associate with in any capacity . . . with any person that is engaged in a business that is the same or substantially similar to or in competition with that of the ASAP Business.”
Relying on its earlier decision in Motorsports of Conyers, LLC v. Burbach (September 2023), the Court of Appeals determined that non-compete clauses that “do not list specific limits on the type of activity, and effectively bar former employees from working in any capacity for competitors” are unreasonable and overbroad. Accordingly, the Court upheld the trial court’s determination that the scope of the non-compete clause was overly broad and, therefore, unenforceable.
ASAP, argued, however, that even if it was overbroad, the GRCA empowers the Court to modify a restrictive covenant and “grant only the relief reasonably necessary to protect [legitimate business interests] and to achieve the original intent of the contracting parties to the extent possible.” Again, the Court of Appeals upheld the lower court’s determination that a revision striking out the “in any capacity” language was “a much bigger pencil than the legislature envisioned the court’s having on restrictive covenants, non-compete provisions.” The Court explained that the revision would have eliminated the “in any capacity” language, but it still would have forbidden Mr. Rose from “engaging in a business” similar to ASAP, without specifying any particular restricted activities. Without saying it, the Court refused to write in additional language to narrow the scope of the agreement.
The Bottom Line
Employers would be wise to ensure that their restrictive covenant agreements with Georgia employees are narrowly tailored to comply with Georgia law. If not, as discussed above, the court will decline to modify the agreement, rendering it unenforceable and void as a matter of law.
