CASE REPORT: FEDERAL COURT IN ALEXANDRIA SIDES WITH EMPLOYEE
On April 15, 2008 Judge Gerald Bruce Lee issued an opinion favorable to the “little guy” in a dispute over the validity of a non-compete clause. The case is Nortec Communications v. Carl Lee-Llacer (USDC, Eastern District of Virginia).
Among other issues, the court was faced the legality and enforceability of a non-compete clause which provided:
Non-Competition. The Employee agrees that he or she shall not, for a period of twelve (12) months after the termination of the employment relationship for any reason:
(a) become employed by or perform services for any existing customer or client of the Company for whom Employee has performed services while employed by the Company-other than on behalf of the Company-if such employment or services relates to the products or services offered by the Company;
(b) directly or indirectly . . . engage in a business in direct competition with the Company within the State of Maryland, Commonwealth of Virginia or the District of Columbia.
Judge Lee found the non-compete unenforceable under Virginia law. Judge Lee held that in situations involving employment with a direct competitor, non-compete clauses which restrict the former employee’s performance of functions for his new employer are upheld only to the extent that the proscribed functions are the same functions as were performed for the former employer. In other words, the non-compete clause can only limit the employee from performing the same “functions” he/she performed for the previous employer.
Good news for the “little guy.”