DO LAYOFFS AFFECT NON-COMPETE CONTRACTS?
In this time of economic hardships a day doesn’t go by without seeing a news report about a local business laying off some of its workers due to financial hardships….and I think the economy is going to get worse before it gets better.
What happens under Virginia law if you have signed a noncompete contract with your employer but you are “laid off” due to the poor economy? Are you still bound to the noncompete contract?
The answer is almost always, “yes.” Virginia is called an “at-will” employment state which means that unless you have an employment agreement for a stated duration (1 year, 5 years, etc.) you can be fired for almost any reason, or laid off. Your employer can still hold you to the terms of your noncompete. However, it will have a difficult time proving that your violations of the noncompete caused the company financial damage.
An employee may still have certain defenses to a noncompete agreement but the mere fact that he/she lost her job due to a staff lay off is not one of those defenses.