In our last post, we began looking at the issue of non-compete agreements. As we noted, such agreements are valid and enforceable in Virginia, but there are certain requirements that must be followed. The first of these, that the agreement is not unduly restrictive on
The requirements that the restrictions on the employee not be greater than necessary to protect legitimate business interests and that non-compete restrictions are not unduly oppressive on the employee both work together. If a restriction is greater than necessary to protect a company’s legitimate business interests, is not an enforceable agreement. Likewise, if an employee is unable to earn a livelihood, it is not unlikely that it is also more expansive than necessary.
The third requirement involves a balancing of policy concerns, including the undesirability of employers imposing trade restraints and the legitimate interest of businesses in preventing employees from leaving with valuable information and training and competing with their former employers. Balancing these competing interests can be particularly difficult in cases where the terms of the agreement are vague.
Employers, in litigation involving non-compete agreements, have the burden of proving that the restraint is reasonable and that the contract is a valid one. For business, it is appropriate to seek the proper remedy when it is proven that a non-compete agreement is reasonable. When there is a clear violation of the agreement, this primarily means an injunction. In cases where there is no clear violation, but the former employee is teetering on the edge of violating the agreement, a business may be able to obtain equitable relief in one form or another.
In our next post, we’ll look at recent recommendations made by the Obama administration, and what it might mean for employers.