Learning the Hard Way: Non-Competes and Subsequent Agreements
The Georgia Court of Appeals handed down a tough lesson for an employer in Mapei Corporation v. Prosser, A14A0368 (Ga. Ct. App. July 9, 2014). The Court of Appeals affirmed summary judgment for an employee on the claim he breached his non-compete with his prior employer. The Court found a subsequent confidentiality agreement signed by the former employee omitted the non-compete covenant that the prior confidentiality agreement contained. The Court found the subsequent agreement replaced the earlier-entered agreement containing the non-compete covenant because the subsequent confidentiality agreement covered the same subject matter and contained a superseding-agreement clause stating the agreement “totally replaces all prior contract agreements or understandings… about confidential information or any other subject matter contained herein.”
The take away for employers is to always be careful when having employees sign multiple agreements. If an agreement contains a superseding-agreement clause, or even if it similar in subject matter to a prior agreement, it is important to determine if there are any prior agreements or covenants within other agreements between the employee and employer that the employer would want to preserve. If so, new agreements can be drafted to maintain or preserve obligations under prior agreements.
While this decision was based on Georgia law, it was decided with the guidance of basic contract principles that many other states follow. Therefore, employers nationwide should remember this lesson to avoid making the same mistake.
This article was written with contributions from Erin J. Krinsky.