We receive calls frequently from employees that are leaving their jobs, and ask “if I open this kind of a business, and hire employee Smith from my old one, will I violate my non-compete?”
The next question is then, “Will the Court find it enforceable?”
My answer is always – “It depends.” We need to review the contract, and research recent court rulings on the issues and language in each specific agreement.
The Supreme Court of Virginia has held that the validity of employer-employee non-competition agreements is determined by applying the following criteria:
(1) Is the restraint, from the standpoint of the employer, reasonable in the sense that it is no greater than is necessary to protect the employer in some legitimate business interest?
(2) From the standpoint of the employee, is the restraint reasonable in the sense that it is not unduly harsh and oppressive in curtailing his legitimate efforts to earn a livelihood?
(3) Is the restraint reasonable from the standpoint of a sound public policy?
If the answer is no to any of the above, then the agreement is not enforceable. But what does “unduly harsh” or “oppressive” mean? Again – this is decided on a case by case basis – upon examination of the terms in your contract.
The moral of this story? Each contract is different – one may be enforceable, and another not. Better not to gamble and face possible lawsuit – better be prepared.