This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Reston Town Center that specializes in federal employee, security clearance, retirement, and private sector employee matters. They write biweekly on RestonNow.
In the private sector, non-compete agreements between employers and employees are becoming more prevalent.
Non-compete agreements generally involve an employer’s decision to impose certain restraints or restrictive covenants on an employee during, and for a period of time after, the employment relationship. Examples of such restraints or restrictive covenants include post-employment covenants not to compete with the employer’s business and non-solicitation of the employer’s customers and employees.
Although federal, state, county, or municipal laws may regulate non-compete agreements differently, under Virginia case law a non-compete agreement must be reasonable to be enforceable. Only a court may decide, as a matter of law, whether a non-compete agreement is enforceable. However, the employer bears the burden of proving that its non-compete agreement is enforceable under Virginia law. A reasonable non-compete agreement generally consists of three components:
- It should be no more restrictive than necessary to protect the employer’s legitimate business interests;
- It should not unduly burden the employee’s legitimate efforts to earn a livelihood; and
- It should be consistent with sound public policy.
The Virginia courts typically look for the following factors when assessing whether a non-compete agreement is reasonable:
- The duration of the restrictive covenant;
- The geographic scope of the restrictive covenant; and
- The scope and the extent of the restricted activity.
Whether the duration, geographic scope, and scope and extent of the restraint imposed by the employer are reasonable depends upon the specific facts of each case. Thus, every non-compete agreement should be analyzed separately and by balancing the non-compete agreement’s unique provisions with the parties’ specific circumstances. Generally, however, non-compete agreements that are more narrowly tailored in geographic scope and duration are more likely to be considered reasonable.
Likewise, overly broad and ambiguous non-compete agreements, or agreements involving employers that do not have a legitimate business interest in the restrained activity, may be unenforceable. Virginia courts will generally not modify non-compete agreements that are ambiguous. Rather, the courts usually construe ambiguous clauses in non-compete agreements against the employer.
Employers enforcing non-compete agreements can typically seek preliminary and permanent injunctions; lost profits damages; damages for lost good will; liquidated damages (if provided in the agreement); and attorneys’ fees. Since the consequences of signing non-compete agreements can be extremely costly and problematic for many employees, we recommend that employees obtain the advice of an attorney, preferably before the employee signs the non-compete agreement.
Virginia courts also recognize non-disclosure agreements (also referred to as NDA or confidentiality agreements) and non-solicitation agreements. The courts generally analyze such agreements in the same way that they analyze non-compete agreements.
Our firm represents federal employees and private, state, and county employees and employers in Virginia, the District of Columbia, Maryland, Massachusetts, Maine, Michigan and New York regarding non-compete agreements, non-disclosure agreements and non-solicitation agreements as well as various other employment matters.
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