Restrictive Covenants

With the economy lagging, and jobless rates still hovering at around 10%, many employers are finding that having employees sign a restrictive covenant agreement is a good idea.  Restrictive covenants can take several forms, including a covenant not to compete (non compete), a confidentiality provision, a covenant not to solicit co-workers to leave their employ and a covenant not to solicit customers.  In many instances, an employer will include one or move restrictive covenants in an employment agreement.

In Georgia, the general rule is that a restrictive covenant in an employment agreement is enforceable when it is limited in scope, duration and geographic territory.  Determining a reasonable scope, duration or geographic territory is usually a case-by-case analysis.  Restrictive covenants that lack reasonable scope, duration or a geographic territory are ordinarily deemed unenforceable.  In an employment context, Georgia courts may not "blue pencil" an agreement, meaning they cannot rewrite the restrictive covenants to scale back the duration, if it's too long, for example. Instead, restrictive covenants tend to be an all or nothing proposition; either they are written properly under Georgia law or they are unenforceable in their entirety.

So, employers looking to retain customers, protect confidential information, and who want to retain valued employees should consider having counsel draft a restrictive covenant agreement for all employees.  Continued employment may be sufficient consideration for signing the agreement, so there's no problem with asking an existing employee to sign one.

Obviously, the value of a well-written restrictive covenant agreement is to deter and prevent any employee who is laid off or quits from going down the street to a competitor with the promise to bring on the company's customers or to bring other staff with them.  In addition, a confidentiality provision can prevent a former employee from taking customer lists, pricing and other sensitive data to a competitor. 

Also, since the job market is tight, some former employees will stop looking for another job and will instead start their own business, essentially becoming a new competitor.

In short, if a company wants to hold onto its market share or to valued employees and customers, having employees sign a restrictive covenant agreement makes good business sense.

Pitfalls of Monitoring Emails

Most employers have established a policy regarding surveillance in the workplace. Typically, this type of policy states that the employees have no expectation of privacy and that telephones, internet use and emails may be monitored. In Georgia, an employer is permitted to monitor phones, email and internet use. However, case law is beginning to emerge that interpets when an employer may cross a line in interfering with an employee's privacy, such as where an employee uses a private email address for communications while using a company-owned computer, posting on social networking sites such as Facebook, etc.

A New Jersey case is illustrative of the challenges and evoluation of legal issues in this electronic age.  In Stengart v. Loving Care Agency, the New Jersey Supreme court held that an employer was not permitted to read e-mails between an employee and her lawyer, even though she sent them using her work computer. The case is interesting because ordinarly, since the computer belonged to the employer, it had a right to monitor activity on such computer and therefore there was no invasion of privacy.

In addition, most company policies addressing surveillance do not specifically mention whether the use of a personal email address would be prohibited or would be subject to monitoring. And, the email communication was between the employee and her attorney, which raises other issues, such as the attorney-client privilege.

Steingart was using a personal, password-protected web-based e-mail account. She also thought that the e-mails, sent to her attorney (and related to a potential employment discrimination suit against her employer) were private. When Steingart later filed a discrimination suit against her employer, the employer retrieved the emails and attempted to used them as evidence, but the court refuse to allow them into evidence.

“[The employee] plainly took steps to protect the privacy of those e-mails and shield them from her employer. She used a personal, password-protected e-mail account instead of her company e-mail address and did not save the account’s password on her computer. … In addition, the e-mails bear a standard hallmark of attorney-client messages. They warn the reader directly that the e-mails are personal, confidential, and may be attorney-client communications,” the court said.

The court also found that the employee “had a subjective expectation of privacy in messages to and from her lawyer discussing the subject of a future lawsuit. In light of the language of the policy and the attorney-client nature of the communications, her expectation of privacy was also objectively reasonable.”

So, it is important that employers clearly set forth when employees do not have an expectation of privacy and that all modes of communication made from company telephones, BlackBerrys, PDAs, email accounts or from a company-owned computer may be subject to search and that no expectation of privacy exists in using such modes of communication.