I received the email below from the Metro Atlanta Chamber of Commerce last week. As an ambassador to the chamber, I forwarded the message to many of my business friends. My technology attorney, Byron Sanford, immediately replied with concerns about Amendment #1, which seemingly provides more security for businesses as it relates to the enforcement of non-compete agreements in Georgia… but not small or medium ones per Byron. His email to me follows the original message from the Metro Atlanta Chamber below.

I have asked the chamber for a response to Byron’s issues and will post that as soon as I receive it.

If any other lawyers have advice on the other amendments I’d love to hear from you.

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Dear Investors:

The Executive Committee of the Metro Atlanta Chamber encourages our members to VOTE YES on November 2 for the six ballot measures below. All of the measures are business-friendly and will stimulate job creation, and one of the measures also addresses trauma funding, which is very important to Grady Hospital.

Click here for a summary of each issue and more details. Again, we encourage you to VOTE YES on each of these and to share this with your employees and staff.

• Amendment 1: Allows contracts with non-compete clauses to be enforced in Georgia courts.
• Amendment 2: Adds $10 tag fee on private passenger vehicles to fund statewide trauma-care expansion.
• Amendment 3: Allows the state to execute multiyear contracts for long-term transportation projects.
• Amendment 4: Allows the state to execute multiyear contracts for projects to improve energy efficiency and conservation.
• Amendment 5: Allows owners of industrial-zoned property to choose to remove the industrial designation from their property.
• Statewide Referendum: Provides for inventory of businesses to be exempt from state property tax.

Sincerely,

Sam A. Williams
President
Metro Atlanta Chamber
235 Andrew Young International Blvd., NW • Atlanta, GA 30303
Bringing the best together to help Atlanta thrive.

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Byron Sanford’s response to me regarding Amendment #1

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FYI, the first amendment, regarding Non-Compete agreements is EXTREMELY misleading and is BAD for many small and medium size business (but great for business litigators like me), as it is almost certain to push more cases regarding non-competes and non-solicitation agreements into court. These agreements are already enforceable in Georgia, if drawn up properly. The new law give JUDGES the power to re-write otherwise unenforceable provision (rather than throwing out over-reaching agreements, as they are now required to do). This means more cases will actually go to trial and the results will be less predictable as the judge gets to decide how the final restrictive provision will read.

This will encourage people to more over-reaching in how these types of provisions are drafted and will result in less certainty over how they will actually be enforces. This kind of uncertainty is bad for small and medium-sized business. The biggest beneficiaries are large businesses (who can easily outspend employees in litigation) and business litigators.

I would strongly encourage small and medium size businesses to get better informed on this issue. The Chamber’s position on this is not necessarily good for all of its membership!

-Byron

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Response from Janice Rys of the Metro Atlanta Chamber

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Chad–Thank you for contacting us and sharing your concerns on Amendment #1.  Our public policy team carefully and thoughtfully prepared all the amendment recommendations for our Board–and this was certainly a complicated one.

As background, earlier this year, the Georgia Legislature overwhelmingly passed HB 173 to put this measure on the ballot as an effort to put Georgia on equal footing with surrounding states when trying to attract jobs to the state.  Specifically, the primary purpose of the amendment is to allow judges to clarify current law and enforce the intent of both employers and employees who enter into employment agreements.  Currently, if there are any imperfections in the document, the judge is prevented from making any modifications (called “blue penciling”) to correct the deficiencies and the whole agreement must be thrown out.   This creates uncertainty for businesses who invest significant time, energy and resources training key personnel.  Georgia is at a competitive disadvantage to other states because of the current unenforceability of its law.

At the same time, the amendment also provides clarity and certainty to employees.  For the first time in Georgia, most employees would be legally ineligible to enter into such agreements should this amendment pass.  The new law would apply only to employees that have proprietary information about their company that could be shared with a competitor.  Additionally, for the first time, it would clearly define any employee agreement so employees know exactly what the law does and does not allow.  It also gives a judge the ability to void the agreement if the employee has experienced a financial hardship – something not in place today.

This current situation deters businesses from investing in and locating high-paying jobs here in Georgia, but Amendment #1 is the remedy.

As a chamber of commerce, we believe in full and fair competition.  We also believe in the value of fair contractual relationships so that both parties can have security in the terms and conditions under which they do conduct business.  We believe in Amendment #1.

Hope this is helpful to you.  As further information, attached are some documents that you may want to peruse on this issue.  Most notable is the letter from a small business owner, Ray DeMott with Southern Equipment, which provides a good look at how the current law is tough on businesses in Georgia, regardless of size.

Renay Blumenthal, SVP of Public Policy will be happy to answer any questions you might have…

Thanks for your support of us!

Janice

Janice Rys

Senior Vice President, Membership Development & Services Metro Atlanta Chamber

235 Andrew Young International Blvd.,NW * Atlanta, GA 30303

404.586.8473 * FAX 404.586.8416

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Additional Opinions

Kills Georgia’s Amendment #1, The Death of the Tech Startup

T Minus 22 Days

So Long Professional Services

How Natural Selection Should Punish Crappy Employers

How to Guarantee Another Startup Cluster Never Happens

Are you in the crosshairs?

Employees Chained & Restrained: Why We the People Must Defend Georgia’s Constitution Against HB173

There is some common business wisdom running around that says “Focus on doing what your business does best and outsource the rest”. I could not agree more. When it comes to information technology, this philosophy can be quite hard to comply with because everyone has some level of expertise with IT in today’s world. However, being able to fix a simple printer issue for an employee is a far cry from un-corrupting an Exchange email server database. And yet, it can be the “simple printer repair”-type issues that can eat up so much of your time without you even realizing it, to say nothing of the more complex errors sprinkled throughout this continuum of “Do It Yourself” to “Oh My God, HELP ME, the server is on FIRE!”.

If you are a professional services firm, your product is time. It is “inventory” that once it passes is gone forever (much like an unused hotel room). As such, for employees whom are billable, they need to devote as much of the workday as possible to billable activities. None of this should be very surprising, but if you observe many professional services firms you’ll see these billable employees doing everything from accounting to human resources to IT. If you work in a professional services firm, I encourage you to keep a very detailed log of every minute of your work day to see for yourself. Odds are you are getting caught up in all kinds of stuff that is better handled by someone else… who isn’t billable.

For accounting: get a book keeper or outsourced CFO. For human resources: try a full service PEO firm such as HR Outsourcing. For information technology management: enter into an agreement with a managed IT services provider. Here is why:

1. MSPs Are More Cost Effective: You can outsource the entire support of your network for a flat fee, including: monitoring, unlimited helpdesk hours, anti-virus software, anti-spam service, email archival and more, for only a few dollars per user per day (or less than 10% of one billable hour per day – assumes a network of 100 or less workstations)
2. MSPs Make You More Productive: A managed IT services firm will generally charge a flat fee for services rendered. This means that your firm will be more productive because it is in the managed IT service provider’s best interest to keep the network fully operational (each trouble ticket or monitoring failure eats into their profit margin).
3. MSPs Provide More Value: MSPs frequently bundle many other services into their managed services offering such as monitoring, anti-virus software, anti-spam service, email archival, and off site backup.
4. MSPs Are Better Than an In-House IT Manager: Managed IT service providers cost about ½ – 1/3 the cost of a full time employee. Unlike employees, managed IT service providers don’t get sick, don’t take vacations, come with their own insurance if they screw up, come with their own suite of software and services (e.g. anti-virus, monitoring, etc.) and don’t need to be equipped with laptops, mobile phones, etc. Besides, why would you put something as crucial as your business network in the hands of one man? A managed services provider will also have more skills sets and experience at their disposal.
5. MSPs Are Better Than a One Man Band: As with the In-House IT Manager, “Why would you put something as crucial as your business network in the hands of one man”? There are many talented one-man IT companies. But… What if something happens to him? What if he gets mad at you?  He can’t very well monitor your network if he is helping another client. What if you have a network emergency and he is with another client and can’t come to you right away? A managed services provider will also have more skills sets and experience at their disposal.

In summary, outsourcing management of you IT and other areas of your business can create massive leverage and allow your firm to bill more time. Now who does not want that?