STARTING YOUR OWN BUSINESS DURING A RECESSION (and beating your Non-compete!)

Unless you take the Thoreau approach, you have probably noticed the United States economy is either in or headed toward a recession.

Amazingly, some folks say this is a great time to start your own business. Now while I fear many will do this because they are being laid off, there are important business decisions to be made, and many legal issues.

QUESTION:
(1) If I am fired, is the non-compete in my contract, still enforceable?
(2) If I take a severance and they offer a non-compete, do I have to sign it?
(3) How can I make sure the employer won’t sue if I start my own business?

An employment contract, even a non-compete, is simply a contract. It is binding (usually) if you agreed to it. So we must analyze the above questions in light of Virginia Contract law.

(1) If you are fired, is the non-compete enforceable?
Look at the language in the contract. Many state if employee leaves voluntarily, he agrees to a non-compete. GET YOUR CONTRACT OUT – send it to our office, and we explain what the terms mean under Virginia law.

(2) If you take a severance package and they offer a non compete, do you have to sign? It depends. If the bargain for exchange is – money, in exchange for signing a contract, you may not get the money if you refuse.

(3) How can you make sure your employer won’t sue?
The only way to do that is to draft and agree to a second contract. You can buy out your non-compete, but unless there is a written agreement that it is no longer valid, your employer has up to 5 years to sue under Virginia law.

As my Mom always said – an ounce of precaution is worth a pound of cure.

Lauren Ellerman

Lauren Ellerman

In 2011, Lauren Ellerman was named "Young Lawyer of the Year" by the Roanoke Bar Association for her work in the community. To speak with Lauren about your personal injury case, contact her at lellerman@frithlawfirm.com.