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White House makes legislative recommendations for non-compete agreements, P.2

We've been looking in recent posts at the topic of non-compete agreements, including the requirements Virginia state law has established for them as well as recent legislative recommendations made by the Obama administration regarding non-compete agreements.

One of the points we wanted to follow up on from our last post is that Virginia is one of several states which take a "red-pencil" approach to non-compete agreements which are invalid or unenforceable. What is means is that an agreement which is not validly executed and which is unenforceable--whether because it violates public policy, is too broad in scope, or too oppressive for the former employee--is thrown out entirely. 

The red-pencil approach differs from the blue-pencil approach used in other states which allows the courts to either strike out unenforceable aspects of the agreement or to modify them so that they are consistent with legal requirements. Under a red-pencil approach, businesses have to get the agreement right or risk losing the competitive restrictions they negotiate with their employees.

What this means for businesses in Virginia is that it is critical to work with an experienced attorney to ensure that the non-compete agreements they negotiate are carefully thought out and properly executed. It remains to be seen what impact the White House's recommendations regarding non-compete agreement policy will have on state lawmakers with respect to non-compete agreements. Whatever effect there might be, it will continue to be important for businesses to work closely with experienced legal counsel to help them navigate legal issues surrounding these agreements, both in the negotiation, drafting, and executing process, as well as with enforcing them in court.

Sources:

Whitehouse.gov, State Call to Action on Non-Compete Agreements, Accessed Nov. 11, 2016.

Whitehouse.gov, Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses, May 2016. 

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