Labor and Employment Law - W. Melvin Haas Iii, William M. Clifton Iii, and W. Jonathan Martin Ii

• Publication year: 2010

Labor and Employment Law

by W. Melvin Haas III* William M. Clifton III** *** and W. Jonathan Martin II***

I. Introduction

This Article surveys recent developments in the state statutory and common law that affect labor and employment relations of Georgia employers. Accordingly, it surveys published decisions interpreting Georgia law from June 1, 2009 to May 31, 2010.¹ This Article also includes highlights of certain revisions to the Official Code of Georgia Annotated (O.C.G.A.).²

* Managing Partner and Macon Office Head in the firm of Constangy, Brooks & Smith, LLP, Macon, Georgia. Emory University (B.A., 1968); University of Alabama (J.D., 1971). Chapter Editor, THE DEVELOPING LABOR LAW (John E. Higgins Jr. et al. eds., 5th ed. 2006 & Supps.). Member, State Bars of Georgia and Alabama.

** Managing Partner in the firm of Constangy, Brooks & Smith, LLP, Macon, Georgia. Oglethorpe University (B.A., magna cum laude, 1988); Georgia State University (M.A., 1990); Columbia University (J.D., 1993). Law Clerk to the Honorable Duross Fitzpatrick, United States District Judge for the Middle District of Georgia (1993-1995). Member, State Bar of Georgia.

*** Managing Partner in the firm of Constangy, Brooks & Smith, LLP, Macon, Georgia. University of Georgia (B.B.A., cum laude, 1991); Mercer University, Walter F. George School of Law (J.D., magna cum laude, 1994). Member, Mercer Law Review (1992-1994); Administrative Editor (1993-1994). Chapter Editor, THE DEVELOPING LABOR LAW (John E. Higgins Jr. et al. eds., 5th ed. 2006 & Supps.). Member, State Bar of Georgia.

The Authors would like to thank James Travis Griffin (J.D. candidate, Mercer University, Walter F. George School of Law, 2012) and Michael Hill (J.D. candidate, Washington and Lee School of Law, 2012) for their outstanding work in helping to research for and write this Article.

1. For analysis of Georgia labor and employment law during the prior survey period, see W. Melvin Haas III et al., Labor and Employment Law, Annual Survey of Georgia Law,

61 MERCER L. REV. 213 (2009).

2. Attorneys practicing labor and employment law have a multitude of reference sources for recent developments in federal legislation and case law. See generally THE DEVELOPING LABOR LAW (John E. Higgins Jr. et al. eds., 5th ed. 2006 & Supp. 2009);

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II. Recent Legislation

A. Modification of Covenants Not to Compete

On April 29, 2009, former Georgia Governor Sonny Perdue signed into law Georgia House Bill 173,³ amending existing law regarding employment contracts that restrict competition.⁴ This legislation became effective on November 2, 2010, after Georgia voters passed an amendment to the Georgia Constitution.⁵ House Bill 173 authorizes a court to modify and limit the relief of otherwise unenforceable covenants⁶ rather than invalidate them entirely.⁷ The bill also provides specific

Barbara T. Lindemann & Paul Grossman, Employment Discrimination Law (C. Geoffrey Weirich et al. eds., 4th ed. 2007 & Supp. 2009); W. Christopher Arbrey et al., Labor and Employment, 2008 Eleventh Circuit Survey, 60 Mercer L. Rev. 1281 (2009); Bureau of Nat'l Affairs, Daily Labor Report, BNA.com, http://www.bna.com/products/labor /dlr.htm (last visited Nov. 11, 2010). Accordingly, this Article is not intended to cover the latest developments in federal labor and employment law. Rather, this Article only covers legislative and judicial developments arising under Georgia state law during the survey period.

3. Ga. H.R. Bill 173, Reg. Sess., 2009 Ga. Laws 231 (codified at O.C.G.A. §§ 13-8-2, -50 to -59 (2010)).

4. Id. ("To amend Chapter 8 of Title 13 of the Official Code of Georgia Annotated . . .; to provide for the enforcement of contracts that restrict or prohibit competition in certain commercial agreements; to provide for the judicial enforcement of such provisions; [and] to provide for the modification of such provisions . . . .").

5. Carl Cannon, W. Wright Mitchell & Alyssa Peters Morris, Client Bulletin #427: Georgians Vote to Make Restrictive Covenants Easier to Enforce, Constangy.com (Nov. 5, 2010), http://www.constangy.com/communications-305.html.

House Bill 173 states,

This Act shall become effective on the day following the ratification at the time of the 2010 general election of an amendment to the Constitution of Georgia providing for the enforcement of covenants in commercial contracts that limit competition and shall apply to contracts entered into on and after such date and shall not apply in actions determining the enforceability of restrictive covenants entered into before such date. If such amendment is not so ratified, then this Act shall stand automatically repealed.

Ga. H.R. Bill 173 at § 4, 2009 Ga. Laws at 246.

6. This method of severing certain covenants that are found to be unreasonable while still enforcing reasonable covenants "is known as 'blue penciling.'" R. Robin McDonald, Ga. Non-Compete Law Is Upheld, Fulton County Daily Report, June 4, 2010, at 1, available at www.dailyreportonline.com.

7. Ga. H.R. Bill 173 at § 3, 2009 Ga. Laws at 243 (codified at O.C.G.A. § 13-8-54

(2010)). House Bill 173 provides in part,

[I]f a court finds that a contractually specified restraint does not comply with [certain provisions of the O.C.G.A.], then the court may modify the restraint

2010] LABOR & EMPLOYMENT 183

guidelines for determining such covenants' enforceability.⁸ Currently, while Georgia law recognizes covenants not to compete in employment contracts, if any covenant in a contract is unenforceable, then all remaining covenants in the same contract are unenforceable.⁹

In 1991 the Georgia Supreme Court invalidated a statute that allowed judicial modification of covenants not to compete on the ground that the statute defeated or lessened competition or encouraged monopolies in violation of the Georgia Constitution.¹⁰ To prevent House Bill 173 from encountering similar constitutional problems, Georgia voters voted on a referendum to amend the constitution, which provides for the enforcement of restrictive covenants in commercial contracts.¹¹ Since the amendment was ratified on November 2, House Bill 173 became effective the following day on November 3, 2010, as opposed to being automatically repealed.¹²

provision and grant only the relief reasonably necessary to protect [legitimate business interests established by the person seeking enforcement] and to achieve the original intent of the contracting parties to the extent possible.

Id.

8. See id. at § 3, 2009 Ga. Laws at 242, 244-45 (codified at O.C.G.A. §§ 13-8-53, -55 to -58 (2010)).

9. Ward v. Process Control Corp., 247 Ga. 583, 584, 277 S.E.2d 671, 673 (1981) ("If any covenant not to compete within a given employment contract is unreasonable either in time, territory, or prohibited business activity, then all covenants not to compete within the same employment contract are unenforceable.").

10. Jackson & Coker, Inc. v. Hart, 261 Ga. 371, 372, 405 S.E.2d 253, 254 (1991)

(invalidating O.C.G.A. § 13-8-2.1(g)(1) (Supp. 1990), repealed by Ga. H.R. Bill 173 at § 2,

2009 Ga. Laws at 232). The statute provided as follows:

Every court of competent jurisdiction shall enforce through any appropriate remedy every contract in partial restraint of trade that is not against the policy of the law or otherwise unlawful. In the absence of extreme hardship on the part of the person or entity bound by such restraint, injunctive relief shall be presumed to be an appropriate remedy for the enforcement of contracts described in subsections (b) through (d) of this Code section. If any portion of such restraint is against the policy of the law in any respect but such restraint, considered as a whole, is not so clearly unreasonable . . . as to be unconscionable, the court shall enforce so much of such restraint as it determines by a preponderance of the evidence to be necessary to protect the interests of the parties that benefit from such restraint. Such a restraint shall be subject to partial enforcement, whether or not it contains a severability or similar clause and regardless of whether the unlawful aspects of such restraint are facially severable from those found lawful.

O.C.G.A. § 13-8-2.1(g)(1) (Supp. 1990). In 1991 the supreme court invalidated O.C.G.A.

§ 13-8-2.1(g)(1) (Supp. 1990). Hart, 261 Ga. at 372, 405 S.E.2d at 254. However, O.C.G.A. § 13-8-2.1(g)(1) remained codified, see O.C.G.A. § 13-8-2.1(g)(1) (Supp. 2009), until it was

repealed by House Bill 173. Ga. H.R. Bill 173 at § 2, 2009 Ga. Laws at 232.

11. See Ga. H.R. Bill 173 at § 4, 2009 Ga. Laws at 246.

12. See id.

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B. Alterations to Self-Insurers Guaranty Trust Fund

On May 20, 2010, the Georgia General Assembly passed an Act that makes a number ofalterations to the Self-Insurers Guaranty Trust Fund (Fund) for workers' compensation.¹³ The Act amends chapter 9 of title 34 of the O.C.G.A.¹⁴ in numerous ways,¹⁵ including the consequential changes discussed below.

New participants in the Fund will be assessed $8000 as opposed to $4000 for their enrollment year.¹⁶ Additional changes for Fund participants include a heightened threshold for maximum annual assessments,¹⁷ heightened minimums of surety bonds or lines of credit that self-insurers must carry,¹⁸ and a reduction in the benchmark amount when a self-insured employer becomes subject to special assessment by the State Board of Workers' Compensation.¹⁹

13. Ga. H.R. Bill 1101, Reg. Sess., 2010 Ga. Laws 126 (codified at O.C.G.A. §§ 34-9-12,

-106, -127, -380 to -389 (Supp. 2010)).

14. O.C.G.A. tit. 34, ch. 9 (2008 & Supp. 2010).

15. Id. House Bill 1101 states that its purpose is

[t]o amend Chapter 9 of Title 34 of the [O.C.G.A.]. . .; to provide for the entry and execution of judgment upon final orders and decisions regarding the Self-insurers Guaranty Trust Fund; to modify the notification period for revocation of a certificate of self-insurance; to revise provisions relative to the...