Can You Get Out of Your Non-Compete Agreement in Virginia?
When signing an employment contract with a new company for an exciting job, it’s easy to skip over reading the non-compete agreement. When an employee signs a non-compete agreement in Virginia, they are contractually bound by the agreement. If the employee violates that agreement, he or she could face devastating legal consequences. Before you sign a non-compete agreement with an employer, it is wise to speak with an experienced lawyer who can help you understand the agreement.
If you have already signed a non-compete agreement, and you have left your job, you may be wondering if there is any way you can get out of your non-compete agreement. We will explore Virginia’s laws regarding non-compete agreements and whether or not you might avoid legal penalties for violating a non-compete agreement in Virginia.
What are Non-Compete Agreements?
Non-compete Agreements are more popular than ever before. These agreements are essentially contracts in which an employee agrees not to leave an employer and then compete against the employer. In most cases, employers insert non-compete clauses into an employment agreement that a new employee signs before being hired. As such, non-compete agreements have become somewhat common.
Most non-compete agreements state the duration of the time the employee cannot compete against the employer. They also limit the employee’s ability to take certain customers along with him or her after leaving the company. Many non-compete agreements include geographic limitations or physical locations in which the employee cannot compete against the employer.
Virginia Courts Disfavor Non-Compete Agreements
Virginia courts tend to disfavor non-compete agreements because they can restrain free commerce. As a result, the more narrowly the non-compete agreements are tailored, the better chance they have of surviving a lawsuit. When the non-compete agreement is reasonable, however, courts will enforce the terms of the agreement. Under Virginia law, non-compete agreements must do the following:
- Protect the interest of a bona fide employer
- Be reasonable in their terms
- Not violate public policy considerations
Virginia courts have held that valid business interests include protecting a business from the poaching of existing customers by the former employee, keeping confidential information secret, and protecting trade secrets. Virginia recently passed a law that states that employers cannot enforce a covenant to not compete with low-wage employees.
The Non-Compete Agreement Must be Reasonable
Employees have a right to make money for themselves after they leave their employers company. Judges in Virginia are less likely to affirm a non-compete agreement if it limits the employee to the point that they basically cannot find gainful employment after leaving the company where they signed the non-compete agreement.
If you have already signed a non-compete agreement, you may be worried that your career is essentially over. However, signing a non-compete agreement is not always the end of the story. Non-compete agreements in Virginia still need to pass several legal tests in order to be valid and enforceable. Virginia non-compete agreements must meet several requirements in terms of reasonableness, including the following according to a controlling court decision in Assurance Data, Inc. v. Malyevac, 286 Va. 137, 144 (2013):
- The restriction imposed by the non-compete agreement is “no greater than is necessary to protect the employer’s legitimate business interest”
- The non-compete agreement is not oppressive or excessively severe when it comes to restricting the employee’s ability to make an income or find another job, and
- The non-compete agreement does not violate Virginia’s public policy.
The Burden is on the Employer to Show That the Agreement is Valid
If you are an employee who signed a non-compete agreement and you are concerned about finding employment in the future, the burden is on your employer to prove that the non-compete agreement is valid. Your employer must show the court that the non-compete clause or agreement meets all of the tests set forth in Virginia case law. Virginia courts consider several factors to determine whether the agreement is reasonable enough to uphold.
First, they will examine whether the time limitations placed on the employee are reasonable. Typically, if a contract limits the employee for multiple years, or even up to a decade, the employer could have a difficult time showing that the time limits are reasonable. They will also consider the geographic limitations placed on the employee.
If the employer limits the employee from working in the entire country, such an agreement would likely be invalid. However, suppose the employer limited the employee from working in a major city, such as Los Angeles or New York City. In that case, the employee could still have the opportunity to successfully set up a business in another major city, and the contract may be reasonable.
Every limiting directive set forth in the non-compete agreement must protect the legitimate business interests of the employer. Courts will look to see if the language in the non-compete agreement is so overbroad that it is difficult to determine how the provision will help the employer. In other cases, non-compete Agreements are too ambiguous for the employee to understand. If you signed a non-compete agreement that is ambiguous, overly vague, or too broad, there is a good chance that Virginia courts will not enforce it. Additionally, employers cannot read images from an employee breaching a non-compete clause unless they established that they had been economically harmed.
Contact Us Today
If you signed a non-compete agreement and you are wondering if the agreement is legally valid, Fox & Moghul, Attorneys at Law, are here to help. It is crucial to seek an experienced Virginia business lawyer’s advice before signing any non-compete agreement. If you have already signed the agreement, we can help you understand it and answer your legal questions. Our law firm represents businesses and employees in issues related to non-compete agreements. Contact us today to schedule your initial consultation.