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The Importance of Double-Checking – Employers Must Ensure Restrictive Covenants Included in Subsequent Employment Agreements

Posted on: September 18th, 2014

By: Amanda McCallum Cash

In a recent Georgia Court of Appeals decision, an employer learned the hard way why it is important to always be aware when employees sign multiple employment agreements. In Mapei Corporation v. Prosser, 761 S.E.2d 500 (Ga. App. 2014), an employee initially signed an employment agreement containing a non-competition provision. Just one week later, the employee signed a similar employment agreement, but this agreement omitted the non-competition provision. Both employee agreements contained a “superseding agreement” clause stating that the agreement “totally replaces all prior contractual agreements.” In an interesting twist, however, the employee did not deliver the first-signed agreement to the employer until after he signed the second agreement, and never mentioned that he signed the second agreement. After the employee resigned and went to work for a competitor, the employer wanted to enforce the first-signed agreement.

In finding that the second-signed agreement controlled, the Georgia Court of Appeals noted that, under Georgia law, a contract becomes binding on the date it is signed – not the date it is delivered. When considered in conjunction with the superseding agreement clause, the Georgia Court of Appeals held that the second-signed agreement totally replaced the first-signed agreement. As a result, because the second-signed agreement lacked a non-competition provision, the employer could not enforce any non-competition restraints.

This decision should serve to remind employers that, when an employee signs more than one employment agreement, the employer should take extra precautions to monitor the contents of each employment agreement. If an employer wishes to continue certain obligations existing under a prior employment agreement, an employer should ensure that subsequent employment agreements are carefully drafted to include those obligations. A failure to specifically recognize or restate covenants or obligations agreed to in prior employment agreements may result in the loss of those employer protections, much like the loss of the non-competition protections in Prosser.

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