This post was originally published in July, 2012. We’re re-posting in case you missed it.
If your company’s non-compete agreement was not specifically tailored for business/employment relationship, it may be unenforceable
In a 2012 decision regarding the enforceability of non-compete agreements, the U.S. District Court for the Eastern District of Virginia sent a reminder to all employers that non-compete agreements must be specifically tailored to the unique employer-employee relationship to which the non-compete agreement is applies.
The court repeatedly emphasized that in examining non-compete agreements, “[t]he Virginia Supreme Court’s longstanding emphasis on deciding each non-compete agreement case on its own facts is particularly important.”
Ultimately, the Judge determined that the non-compete agreement which the employer was seeking to enforce was valid, and that its former employees would be restrained from competing with their former employer.
However, this decision was only reached after the court made a thorough review of the employer’s particular business needs and practices, as well as the former employees’ own circumstances. In analyzing the non-compete agreement, the court carefully scrutinized a number of factors that will be unique to every employer-employee relationship: (1) the relative levels of sophistication between the employer and the employees, (2) the amount of consideration received by the employees, and (3) the employees’ opportunity for earning a livelihood if the covenant not to compete remained in force.
Practical Counsel
Although the court found that the non-compete agreement was valid when applied to the specific factual situation of the parties’ to that case, under a slightly different set of facts the non-compete agreement would likely be found to be overbroad and unenforceable.
This is often the case where a company uses a non-compete agreement found on the internet, or from another state, employer or employment situation.
If your company’s non-compete agreement is not specifically tailored to your unique business and employment relationships, it is possible it is not enforceable.
Therefore, if your non-compete has not been reviewed by legal counsel within last year or two, it should be. GCPC’s lawyers are experienced with the evolving law on non-compete agreements, and can draft / review your agreements to help ensure they are enforceable. Contact General Counsel PC’s Merritt Green, or call 703.556.0411, for more information on employment law.