2009 A YEAR IN REVIEW — VIRGINIA NON-COMPETE LAW
New Years is a great time to evaluate the past year and consider how it will impact us in the future.
So let us begin this examination / evaluation, by looking at legal trends in the Commonwealth.
Did Courts get tougher on non-compete cases?
Were there more non-compete cases stuck in litigation?
Sadly, I have no way of answering those two questions directly, but my gut (and experience) tells me that the answer to both questions is YES.
More people are litigating non-compete cases, and Courts are continuing to throw those out that are too over broad.
I have seen even small companies waste time and money on non-compete litigation, trying to make an example out of one ex-employee. Of course, with more people losing their jobs, there were more people looking for work who had these restrictive covenants.
Although there were a few employee victories, non-competes are still very much alive in Virginia. So did the law change at all regarding non-competes in Virginia in 2009? Not really – although there were a few fun cases worth noting:
Eastern District of VA (Federal Court) – Deltek v. Iuvo. Deltek, a large Northern Va. company, sued a group of ex-employees who went out on their own. They alleged all sorts of terrible things had been done by the employees – trademark infringement, breach of contract, trade secret violation etc. In November, the court found the employee agreements were overly broad and therefore unenforceable. Although the case is still going, the wind has been taken out of the company’s case – which of course is great news for the employees.
Why the case mattered? News flash – even big companies write bad agreements (or shall I say, their lawyers do).
Fairfax Circuit Court – Lasership Inc. v. Watson, Circuit court held a non-compete was over broad as it prohibited the employee from performing work that she may not have done for her original employer.
Why the case mattered? Its not simply the time and geographic scope that makes agreements unreasonable, the actual prohibited actions are most often where courts spend their time and analysis.
Eastern District of VA (Federal Court) reminded us in State Analysis, Inc. v. Am. Fin. Servs. Assoc. that you only have 5 years under Va. law to sue someone for written breach of contract over a non-compete.
So, not much has changed on the legal landscape. We still encourage Virginians to know their rights and restrictions before they get sued – but are happy to help them in 2010 should non-compete quarrel lead to the Court house steps.