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    The Greater Williamsburg area is an exciting place to live and work, especially because of the large number of entrepreneurs who have built businesses from the ground up. These entrepreneurs have taken their passion and made it their profession. Many of us want to take that step. Before you begin, you need to think of the type of business entity you want to form. Our attorneys have extensive business experience, from small one-person companies to publicly traded major corporations. Our attorneys are among the leaders in Virginia in the representation of Common Interest Communities. These communities are generally referred to as "homeowners associations," or "HOAs," and "condominium associations." In the greater Williamsburg area alone, we provide legal assistance to nearly 100 associations. Our attorneys have successfully prosecuted and defended a wide array of civil disputes involving community association covenant enforcement, commercial transactions, construction disputes, contracts, real estate matters, boundary line and easement disputes, employment matters, antitrust litigation, copyright violations, administrative proceedings, and estate issues. Real Estate law encompasses a wide variety of matters, and our attorneys have vast experience to assist you. Whether you need assistance with a commercial or residential closing, or you have questions relating to residential or commercial leasing, we provide experienced advice and counsel to our clients. Zoning law can be a complicated maze of statutes and ordinances. We have ample experience in successful applications for rezoning, variance, and special use permit requests. Finally, commercial and residential construction provide special challenges with respect to financing issues and the construction process. We serve as counsel to various financial institutions.

Does your Business use Employee Noncompete Agreements?

The legal issues related to employee “non-competes” (also known as covenants not to compete or non-competition agreements) are often not well understood by employees subject to them, the companies insisting upon them, or the companies intending to hire persons subject to them.  That may well be especially true in the Commonwealth of Virginia where one frequently hears, “That agreement is so broad it will never be enforced and Virginia doesn’t ‘blue pencil’ these agreements, so no problema.”

Williamsburg Virginia Business Lawyers

True enough, Virginia courts generally do not enforce unduly broad or overreaching employee agreements not to compete because they are contrary to the public policy of the Commonwealth of Virginia.  Such agreements are “disfavored in the law” and are strictly construed by Virginia courts.  Why?  Because covenants not to compete are frequently coerced from employees in exchange for the “privilege” of working for the employer, never mind the employee is providing services to the employer and does not usually receive any separate consideration, or payment, for giving the non-compete. Further, they are disfavored because they are restraints of trade that affect the employee’s ability to earn a livelihood, restrict others from obtaining the employee’s services, and deny the public the benefit of such services.

Employee non-competition agreements are enforceable in Virginia where the agreements (1) are narrowly drawn to protect the employer’s legitimate business interest, (2) are not unduly burdensome on the employee’s ability to earn a living, and (3) are not against public policy.   Further, Virginia courts, unlike the courts of some states, will not rewrite, or “blue pencil,” them to make them enforceable.

Whether a non-competition agreement is unduly broad or is unduly restrictive of an employee’s ability to earn a living is fact based.  Generally, however, where the restricted geographic boundary, occupational limitation or time limitation extends beyond any legitimate employer interest, or where the agreement prevents all or substantially all employment in the employee’s field of endeavor within a reasonable geographic area, the non-competition agreement will generally not be enforced.

Where Virginia courts find covenants not to compete enforceable, they will use their injunctive power to keep employees and prospective employers from violating them.  Further, they will enforce liquidated damage provisions for breach of contract where the actual damages contemplated at the time of the agreement are uncertain and difficult to determine with exactness and where the amount fixed is not out of all proportion to the probable loss.  Finally, Virginia courts will enforce choice of law clauses where such clauses are not unconscionable.

Enforceability is not the end of the matter, however, either for the employee subject to the agreement, the company to which the duty not to compete is owed, or the prospective employer of such an employee.  There are many more issues potentially seriously affecting the employer, the employee, and the prospective employer.  These involve general contract law, duties of good faith, fair dealing and loyalty, tortuous interference with contract and business expectancy, common law and statutory conspiracy, and trade secret law.  Thus, employees with non-competition agreements and employers who seek to employ them are well advised to seek legal counsel as to the potential issues and ramifications that are fact specific to the employee and the prospective employer.

We have provided a much fuller analysis of non-competes in the Tarley Robinson Library. Check it out!

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia


Neal Robinson

Neal specializes in corporation and business entity law, mergers and acquisitions, business planning and strategic analysis. His clients have ranged from start-up operations to well established organizations.

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Filed under: Business Planning, Merger & Acquisition, Neal J. Robinson, State & Federal Litigation by Neal Robinson

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