By David J. Marquardt of Duff & Kronfeld, P.C. posted in About the Law on Sunday, March 22, 2015.
Over the years, I have heard various myths about employment contracts, specifically as they relate to non-competition provisions. A typical “non-compete” clause provides that the employee cannot leave the company and solicit or provide similar services to the company’s customers for a specific period of time. Often, the agreement further limits the employee’s ability to participate in any similar business activities within a certain geographic radius of the company’s endeavors.
I am surprised by the number of people who believe non-compete agreements are illegal in Virginia. This is simply not true. Clients often confuse “right to work” with its connection to non-compete agreements. In fact, Virginia is a “right to work” state; but, this has very little relation to the legality of a non-compete agreement.
The essential meaning of “right to work” is that a worker cannot be required to join a labor union as a prerequisite to employment within a specified field. That is a far cry from meaning that non-compete agreements are illegal, or that an employee who has signed a non-compete can always ignore its provisions and has a right to work wherever he or she wants.
To the contrary, under Virginia law, non-compete agreements are disfavored, but quite legal. Whether the agreement is enforceable is a slight, but important, distinction. Whether a non-compete provision is enforceable is a question for the Courts. Each agreement, in each industry, for each employee, is examined on a case-by-case basis. The employer bears the burden of proving that the agreement: (1) is drafted to protect the employer’s legitimate business interest, (2) is not unduly burdensome on the employer’s ability to earn a living, and (3) does not violate public policy. In making such a determination, a Court will look to the scope and reasonableness of the agreement’s geographic and durational limitations.
Regardless, the determination is hugely important for the parties involved. Businesses must protect their interests against unfair competition. Workers need to make a living without fear of restraint on the ability to practice their craft.
With such high stakes, it behooves both employers and employees alike to consult with an experienced attorney in the event a non-compete agreement may be at issue. Don’t hesitate to contact an attorney at the Duff Law Firm if you or your business requires assistance in litigating your non-compete agreement.