## Facts

- An auditor entered a written agreement (later assigned to a successor company) to audit client accounts payable to identify overpayments and missed discounts.
- The agreement contained a two-year covenant not to compete after termination, barring the auditor from competing “directly or indirectly” and “in any capacity whatsoever” within any areas constituting the company’s areas of business activity at termination.
- In practice, the restricted territory covered multiple states in which the company operated, including Georgia, Alabama, Florida, North Carolina, South Carolina, and Tennessee.
- The agreement also included a covenant against disclosure of confidential or privileged information about the company’s business and clientele.
- Although the contract used “independent contractor” language, the court analyzed the restrictive covenants as arising from an employment relationship.
- The auditor terminated the relationship and then performed auditing work the company claimed competed with its business and violated the restrictive covenants.

## Issues

1. Whether the relationship should be treated as employment for purposes of reviewing restrictive covenants despite “independent contractor” terminology.
2. Whether a two-year noncompete covering the employer’s business territory and prohibiting competitive work “in any capacity whatsoever” was reasonable and enforceable under Georgia law.
3. Whether Georgia courts may sever or rewrite an overbroad noncompete to enforce a narrower restraint.
4. Whether the confidentiality covenant was enforceable independent of the invalid noncompete.

## Decision

- The Supreme Court of Georgia affirmed dismissal of the employer’s complaint seeking injunctive relief.
- The court treated the agreement as an employment contract for restrictive-covenant analysis.
- The court held the noncompete unenforceable because it was overbroad in geographic scope and in the range of prohibited work, and because it lacked sufficient specificity as to prohibited competitive activities.
- The court refused to apply a blue-pencil/severability approach to salvage the restraint by judicial modification.
- The court recognized confidentiality covenants may be enforceable if reasonably drawn, but the employer could not preserve an otherwise invalid noncompete by recasting it as protection of confidential information.

## Legal Principles

- In Georgia, employment restrictive covenants are enforceable only if strictly limited in time and territory and otherwise reasonable in light of the employer’s protectable business interests and the employee’s ability to work.
- Courts look to substance rather than contract labels in determining whether restrictive-covenant rules applicable to employment govern a relationship.
- Territorial restraints tied to the employer’s entire area of operations are disfavored, especially absent a demonstrated, legitimate business need for such breadth; restraints limited to the employee’s actual work area are more likely to be upheld.
- Provisions barring work with a competitor “in any capacity” impose a greater restraint than necessary and are generally unreasonable.
- A noncompete must describe with adequate clarity the nature of the competitive business and the activities prohibited.
- Georgia courts will not rewrite or partially enforce an overbroad employment noncompete; if the covenant is unreasonable as drafted, it is unenforceable.
- Confidentiality restraints may be valid when narrowly tailored to protect genuine secrets and not used as a substitute for an invalid restraint on competition.

## Conclusion

The court declined to enforce a two-year, multi-state employment noncompete that prohibited competitive work “in any capacity,” treated the relationship as employment despite “independent contractor” language, and reaffirmed that Georgia courts will not salvage an overbroad noncompete by judicial rewriting.


Howard Schultz & Assocs. of the Se., Inc. v. Broniec, 239 Ga. 181, 236 S.E.2d 265 (Ga. 1977)