If you work in Virginia, you may have signed a non-compete agreement with your employer. Non-compete agreements are contractual promises between an employer and employee governing the employee’s behavior when employment ends. When employees change jobs or their employment is terminated, a non-compete agreement can limit their employment options.
Whether you’re an employee with questions about a non-compete agreement or a business owner or manager, consulting with a skilled attorney can be beneficial. Surovell, Isaacs, & Levy, PLC is a full-service law firm serving clients in Northern Virginia. We can help you evaluate and navigate legal issues related to non-compete agreements.
What Is a Non-Compete Agreement?
A non-compete agreement, sometimes called a restrictive covenant, is a contract between two parties—typically an employee and an employer—that regulates what the employee can do after leaving the company. Its main aim is to ensure that the former employee refrains from participating in specific actions, behaviors, or new jobs that could compete with the former employer.
Virginia businesses may implement non-compete agreements to protect their trade secrets, ideas, and business methods. Doing so ensures that employees, partners, and contractors cannot use the business’s information to establish their own competing companies or seek new job opportunities. Employees could still be bound by a non-compete agreement even if they don’t have access to a company’s trade secrets.
The Benefits of Non-Compete Agreements for Employers
Non-compete agreements offer several benefits for employers wanting to protect their business interests. For example, when employers require key employees to sign enforceable non-compete agreements, they can safeguard proprietary information, innovative ideas, and trade secrets from competitors. Using non-compete agreements can help create a culture of confidentiality among employees.
Non-compete agreements can prevent valuable employees who possess critical knowledge and skills from using their expertise to benefit a rival company. This further aids in workforce stability and protects the investment made in employee training and development. Non-compete agreements can also help create trust between employers and employees, ensuring that both parties clearly understand the terms of employment and post-employment expectations.
Overview of Virginia’s Non-Compete Law
Whether you work for a tech startup, a non-profit, or a defense contractor, you may have been asked to sign an employment agreement with a non-compete clause.
If you’re an employee in Virginia who has signed a non-compete agreement (or a contract with a non-compete clause), there may be more to the story.
Not all non-compete agreements are enforceable under Virginia laws. Non-compete agreements must meet certain criteria to be enforceable. According to relevant case law, for a non-compete agreement to be valid, the employer must demonstrate the following:
- The restriction on the employee is not greater than is necessary to protect the employer’s legitimate business interests
- The agreement isn’t excessively severe or oppressive in restricting the employee from finding another job or making an income, and
- The promise doesn’t violate a clear mandate of public policy in Virginia
Enforcing a Non-Compete Agreement in Virginia
Employers must show that the non-compete agreement is legally valid before a Virginia court will enforce it. Courts will consider several factors, including the reasonableness of the time and geographic limitations placed on the employee, when deciding whether the agreement is enforceable. For example, if the non-compete agreement prohibits the employee from working in the United States for 10 years, the court may determine that it is overly restrictive.
Additionally, the employer will need to prove they’ve suffered harm in the form of actual monetary damages. For example, the employer would need to show specific examples of successful competition from a former employee that resulted in financial injury to their business. When these factors can be proven, the employer may be able to recover damages from their former employee as set out in the non-compete agreement. Many agreements include liquidated or double-damage provisions.
Virginia has Banned Non-Compete Agreements for Low Wage Employees
In 2020, Virginia began prohibiting non-compete restrictions on “low-wage employees.” The new law only applies to non-compete agreements on or after July 1, 2020. Low-wage employees include independent contractors who are compensated for their services at an hourly rate less than the median hourly wage in Virginia. Interns, apprentices, students, and trainees, both paid and unpaid, are also considered low-wage employees. Employees earning less than $76,081 per year are also considered low-wage.
Pitfalls to Avoid in Non-Compete Agreements
Working with an attorney can help avoid common pitfalls when creating a non-compete agreement for your company. Virginia courts will not enforce non-compete agreements when they don’t meet the legal requirements under Virginia law. The following are common pitfalls to avoid when drafting a non-compete agreement:
- Vague Language: avoid ambiguous terms that can lead to misinterpretation of the agreement’s intent or scope.
- Broad Restrictions: Limitations on time and geographic scope should be reasonable.
- Failure to Align with Business Interests: The agreement must show how it protects legitimate business interests, like trade secrets or proprietary information.
- Ignoring State Laws: Be mindful of state regulations, such as Virginia’s prohibition on non-compete agreements for low-wage employees.
- Neglecting Consideration: The agreement must be supported by adequate consideration, such as a job offer or monetary compensation.
- Inconsistency with Employment Policies: The non-compete should align with other employment policies and agreements to avoid conflicts.
Contact a Non-Compete Agreement Attorney in Northern Virginia
If you’re an employee in Virginia and you’ve already signed a non-compete agreement or you are considering signing one, you’ll benefit from speaking to an experienced attorney first.We also provide tailored legal counsel to employees and employers. Similarly, employers benefit from speaking with a qualified attorney who can review the non-compete agreement before it’s signed, identify potential pitfalls, and ensure compliance with Virginia laws. Contact Surovell, Isaacs, & Levy, PLC to schedule a case evaluation.