Georgia Amendment 1 – November 2, 2010

September 24, 2010 § 13 Comments

My friend Mike Baer called me last night and said, “Hey man, have you heard about Ammendment 1? As a contractor, it kind of freaks me out – go check it out.”

So this is a proposed amendment to the Georgia State Constitution that reads like this:

Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?

(__) Yes
(__) No

More economically competitive, you say? Reasonable agreements, you say? Well, golly gee, yes – that sounds great!

This description is misleading at best! This is what the amendment is about:

A RESOLUTION proposing an amendment to the Constitution so as to allow the enforcement of contracts that restrict competition during or after the term of employment or of a commercial relationship so long as such contracts are reasonable in time, area, and line of business; to provide that courts may modify such contracts to achieve the intent of the contracting parties; to provide for the submission of this amendment for ratification or rejection; and for other purposes.

Do we really want plumbers to not be able to work for other plumbing companies (or start their own)? How about electricians, carpenters, painters, software developers, lawyers, paralegals, medical receptionists, and so on, and so on, and so on?

With an unemployment rate of 10% (PDF), we really need more restrictions on the ability of individuals to find a job? We want to discourage people from starting small businesses? This will make Georgia more economically competitive? If by attracting employers to open business in Georgia so that they can lock employees into employment contracts and render them practically unable to quit their jobs despite low pay, poor working conditions, or simply better opportunities, then yes, I suppose it would make Georgia more economically competitive.

Read the summary, or the full text.

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§ 13 Responses to Georgia Amendment 1 – November 2, 2010

  • Y. R. U. Sosurprised? says:

    Welcome to the Obama administration — where have YOU been?

    • mikevallotton says:

      I think you might be missing the point.
      http://www.ritholtz.com/blog/2010/09/you-vs-corporations/

    • Judy says:

      You can’t be serious. Please educate yourself. First and foremost, this is the state government, not the federal government. Second, five of the six who introduced the amendment are *Republicans*. This is most definitely a conservative issue (looking out for big businesses), not a liberal issue.

      • Judy says:

        I just wanted to make it clear that my previous comment was directed to Y.R.U. Sosurprised, not Mike.

        Mike, thanks for the link. That is very interesting (and scary).

      • mikevallotton says:

        I got it, Judy.

        I thought about just deleting that comment as blog spam, but decided to let it through just to foster some discussion, if for no other reason. I’m glad that it did.

  • Ed Dennis says:

    Excellent summary of this below
    AMENDMENT NO. 1:

    “Allows competitive contracts to be enforced in Georgia courts”

    Not only is this a harmful amendment for most Georgians, the caption on the ballot is totally misleading. This amendment, instead of promoting competition, will enable mainly out-of-state companies to restrict Georgia employees from going to work for others or starting their own businesses.

    This will do just the opposite of the description on the ballot; it will stifle the growth of small business and the mobility of employees.

    The Georgia Constitution currently provides at Article III, Section VI, Paragraph V(c) that a contract “which may have the effect or which is intended to have the effect of defeating or lessening competition, or encouraging a monopoly [is] unlawful and void.”

    Following this provision of the Constitution, the Georgia appellate courts have set clear limits on the restrictions an employer may put on employees who leave to go to work for themselves or another. These are the types of things that employers may not put in their contracts:

    • They may not prevent employees from working in “any capacity” for another. The contract must limit the former employee from doing the type of work for a new employer which would actually be competitive with the former employer.

    • An employer can prevent a former employee from soliciting existing clients, but it is unlawful to prevent a client or customer from deciding on his or her own to do business with the former employee.

    • A prohibition of competition is invalid if it extends to territories where the current employer does not even do business.

    • A prohibition against competition for an excessive time is illegal.

    • A prohibition is invalid if it does not clearly set forth the types of business and the places where the former employee is prohibited from working or competing. The former employee cannot be made to “guess” where it is legal or not to work.

    • A prohibition on disclosure of information by a former employee is not valid unless it is limited by a reasonable number of years or involves an actual trade secret. It serves no public purpose to bar an employee from using information that is stale or publicly known.

    Moreover, the Georgia Supreme Court has held that if a restrictive covenant is invalid in one respect, the courts will not enforce any of it. To do otherwise would allow the employer to get the benefit of coercing a former employee to work under a contract which contains one or more invalid provisions.

    As a result of this body of law, there are thousands of Georgians who have been able to leave one employer and start their own businesses or work for others in fields as diverse as medicine, pharmacy, accounting, insurance, customer service, telecommunications, and retailing. At the same time, employers who are careful to have restrictive covenants drawn in compliance with Georgia law have no difficulty when they do not try to restrict employees beyond what the law allows.

    Now to this amendment: HR 178 is the proposed amendment. It frames the question as whether “to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements.”

    The legislation to do this has already been passed at O.C.G.A. 13-8-50, but for the legislation to go into effect, the constitutional amendment must first pass.

    The heart of 13-8-50 is that it will give the employers a second chance to go to court and have a judge replace any provision that is unlawful with a new provision crafted by the judge which the judge feels is reasonable. Thus instead of bringing certainty to the law, the constitutional amendment and its companion legislation would put everything in the hands of judges; create more litigation than before; and decidedly tilt the table in favor of employers who have the resources to go to court and get what are now unlawful restrictions on employees modified and thus deter the ability of an employee to risk leaving to go into business for himself or with another. It is a mechanism to allow employers to have “unreasonable” and “unenforceable” agreements made over: a “do-over” at the expense of employees who may wish to leave.

    Usually there is a tendency to pass amendments with a confusing ballot description like this. Folks will not pay enough attention to know that this is really a terrible proposal. This time, however, it is critical that Georgia voters pay attention.

  • Mike Baer says:

    Great post. Thanks for following up!

    • mikevallotton says:

      Of course, and thanks for the heads up, Mike. I wish this was getting more press, but I’m not sure what else I can do to promote it. Hopefully this is defeated next month.

  • Mike Baer says:

    Good Article on this subject. Talks about how they came up with the wording: http://www.emailcontact.com/nl/nl-output.php?nl_id=125282&bus_id=2125

  • Darrell Thompson says:

    Excellent summation. I am pleased someone else is reading the proposed amendment. However, I am most fearful of the open ended, undefined use clause at the tail, “and for other purposes.” It bodes ill, having a similar air as the Commerce clause, or more properly known as the Usurpation clause. Remember when the lottery money was to go for education? The text of that bill actually read “TBD”.

  • […] Mike Vallotton points out, here’s the end product after Amendment 1 passes: “Do we really want […]

  • omie sherrill says:

    I will be voting no for amendment 1 on November 2nd!

    My daughter was employed for approximately five years as office manager for Two Men and A Truck in Stockbridge and Peachtree City, Georgia. Prior to working for Two Men And A Truck in Stockbridge and Peachtree City she was also manager of another Two Men And A Truck franchise in Stockbridge, Georgia.

    She did not leave her employment, but was terminated because she discovered, what she believed, to be unethical business practices within the Franchise. Her employer has consistently taken vindictive measures against her to prohibit her from working in the moving industry. Her former employer is currently advocating Amendment 1 in an ad paid for by Duane Ackerman and has run articles in both the AJC and Macon Daily making false accusations against her former office manager which is my daughter.

    Should a mother of three small children be refused to continue working in their chosen profession because an employer terminates them without good cause?

    The current law protects people like my daughter who are victimized by their employers. No one should be denied their rights of employment in their field of expertise.

  • […] My previous blog entry regarding Amendment 1 was on the first page of google’s search results for most combinations of Georgia, Amendment, November 2nd, etc. It was the top search result in many cases. I assume it was largely the same for Bing and Yahoo, although to be honest, I haven’t really verified. […]

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