Tuesday, June 24, 2008, 10:15 PM

Leaving on a midnight train (and forum selection clause) from Georgia

It is well known that Georgia has a strong public policy against restraints on trade, including restrictive covenants in employment agreements. The application of this public policy results in "strict scrutiny" of restrictive covenants (covenants not to compete, customer non-solicitation covenants, non-disclosure of confidential information, and non-solicitation of employees) contained in employment agreements.

For years, Georgia's public policy has led Georgia courts to ignore provisions in employment agreements where the parties have agreed that another state's laws will apply. The rationale has been that Georgia's public policy trumps foreign law that would likely be more favorable toward the restraints.

Several years, the Georgia Court of Appeals held that enforcing a forum selection clause in an employment contract containing a non-competition clause did not typically contravene Georgia public policy. More recently, in Hasty v. St. Jude Medical S.C., Inc, 2007 WL 1428733 (M.D. Ga. 2007), the federal district court for the Middle District of Georgia upheld a forum selection clause in an employment-related non-competition agreement and transferred the case to the federal district court in Minnesota.

In light of these decisions, employers who want to have foreign (non-Georgia) law applied to agreements signed by their employees working in Georgia should be sure to include mandatory forum-selection clauses in their employment agreements (and cross their fingers that the law does not change).


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