Omnisec Int’l Investigations, Inc. et al. v. Slavica Stone, Fairfax Co. Cir. Ct., March 26, 2019 (Judge Richard Gardiner)
Slavica Stone worked for Omniplex (and its subsidiary, Omnisec) from 2003 until 2017. Omniplex conducts security clearance background checks for agencies and performs its work nationwide and overseas. Upon taking the position, Stone signed a Non-Solicitation, Non-Competition and Confidentiality Agreement (the “Agreement”). In April 2017, Stone resigned her employment with Omniplex to take a job with a competitor, CSRA, as program manager for a contract that Omniplex had previously handled while Stone was employed with Omniplex. Before resigning from Omniplex, but after receiving her offer from CSRA, Stone emailed various Omniplex documents to her personal email account. The Agreement’s non-solicitation of employees, non-disclosure, and non-solicitation of customers clauses were at issue in Fairfax County Circuit Court.
For restrictive covenants to be enforceable, they must be (1) no greater than necessary to protect a legitimate business interest, (2) not unduly harsh or oppressive in curtailing an employee’s ability to earn a livelihood, and (3) reasonable in light of sound public policy. The non-solicitation of employees clause stated that Stone, during employment and for one year after, would not induce any employee of Omniplex to leave to work for any other employer or “in any other manner for any reason induce any of Omniplex’s employees to leave his/her employment.” The court found the clause was enforceable, specifically noting that clauses restraining former employees from urging current employees to leave the company for any reason, including health, are not objectionable, because such clauses don’t interfere with the employee’s right to secure gainful employment. The non-disclosure clause stated that Stone “during Employee’s employment with Omniplex and thereafter,” would not use, disclosure or transfer any confidential information or “accept any employment or other professional engagement that likely will result in the use or disclosure, even if inadvertent, of Omniplex confidential information.” The court held that the Agreement’s non-disclosure clause was enforceable, even though it was a perpetual bar on non-disclosure, because it did not impair Stone’s ability to earn a living.
However, the court found the part of the non-disclosure clause preventing Stone from accepting employment “that likely will result in the use or disclosure, even if inadvertent” of confidential information, was unenforceable, because it was unduly burdensome since Stone can’t know which potential future employment may result in the use or disclosure of confidential information. The court noted that while an employer can restrict a former employee’s ability to use confidential communication in perpetuity, it can’t restrict an employee’s future employment in perpetuity with a restriction under which the employee can’t know which employment she may undertake because she can’t know which employment may result in the use or disclosure of confidential information. The non-solicitation of customers clause stated that Stone, for one year after employment, would not solicit business with any client of Omniplex that she “solicited, called upon, conducted business with, became aware of, or identified as a potential customer or client of Omniplex” during her employment. While Stone argued the clause was overbroad, the court found the clause was sufficiently restricted to clients or potential clients that Stone conducted business with or became aware of during her employment. Since Stone worked only with federal agencies in need of security investigations, the restriction was limited to a specific area of competition, since Stone wouldn’t have knowledge of clients in other areas.
The court’s determination in this case should not be seen as a clear rule that all similar agreements will be decided similarly.
These types of issues are decided on a case-by-case basis and other situations may be decided differently. Each agreement is unique based on the circumstances and a court will balance the factors to determine if each specific agreement is narrow and reasonable enough to be enforceable. However, other cases with similar facts and clauses may find guidance in the court’s ruling. Specifically, here the court expressed that perpetual bars on nondisclosure may be enforceable, since they will not impair an employee’s ability to earn a living. However, the court found that a similar perpetual bar on accepting employment that may result in the inadvertent disclosure or use of confidential information was not enforceable. The court found this clause problematic because an employee would not be able to judge which potential employment may inadvertently result in the disclosure of confidential information. Employers should keep in mind that similar clauses in their own agreements are likely to be found unenforceable.
Additionally, based on the court’s ruling here, it seems that clauses restraining former employees from urging current employees to leave the company for any reason, including health, are enforceable, because such clauses don’t interfere with the employee’s right to secure gainful employment. A final takeaway seems to be that non-solicitation clauses that appear to cover “every conceivable” customer or potential customer may still be enforceable if the clause can be read to include restrictions, as was the case here. If an employee only worked in a specific area of competition and the non-solicitation clause only covers customers the former employee would have gained knowledge of in that specific area, the clause is likely sufficiently restricted.
Whether you’re an employer or employee wondering about the enforceability of a restrictive covenant, attorneys at General Counsel PC can provide you with knowledge and assistance to better understand your rights. Our attorneys are experienced in reviewing, drafting, negotiating, and litigating these agreements for businesses and individuals across Virginia, specifically in Fairfax County, Arlington, Loudoun County, and Prince William. Call General Counsel PC at 202-360-4230 today to see how we can help you.