Bad news for Virginia Employees – re: Non-Compete agreements and blue pencil provisions
The following phrase is used by business litigation and transactional attorneys across the Commonwealth – “blue pencil provision.”
I’ve written about them before in past posts, but essentially they are provisions written into employment contracts that state or infer if the scope of the contract provision (non-compete or non solicitation) is deemed to be unreasonable or invalid by a Judge, the Judge will re-write the provision to make it a reasonable restriction.
Example – Judge thinks 60 mile restriction on providing services is too far as almost all patients reside within a 30 mile radius, Judge (in states other than Virginia) will simply re-write the agreement to include a now modified 30 mile prohibition on services.
I have celebrated with many a client on the phone and in my office that the law of Virginia will not enforce such a ridiculous provision. Meaning, even if both parties agree in writing – a Judge will not accept the invitation to re-write your provision. She will merely serve as an Umpire, call balls and strikes (valid, or invalid) and leave the batters box for the employee and company to stand and swing again.
Recent Decision in Northern Virginia
In a recent federal court case in the Eastern District of Virginia (basically I-95 East and Northern Virginia) a judge was asked to rule whether the mere existence of a blue pencil provision in a non-compete (which we all know is invalid and won’t be enforced by the Court) makes the related non-compete provision also invalid.
I have been telling clients for years that I think the existence of such a clause, (which is against the public policy of the Commonwealth, unenforceable and invalid) should extend and invalidate the related non-compete language or clause. But, I have also told clients that thus far, no Judges have agreed with my assessment of the law. Sadly, we now have a well reasoned and articulated judicial opinion that DISAGREES with my opinion of the law and we are therefore left with this as legal precedent.
So what does that mean?
In practice, very little. Despite expressing my opinion I have been quick to advise clients NOT to hang their hat on my opinion, not yet supported by the Courts. I have advised the argument was speculative argument and one with little to no support in the common law (ie – case law).
The bad news is, I think this case has set us back a few steps, and maybe a few years.
What I want is for Courts to create a level playing field where employees get a chance at fighting contracts that are badly written, and include provisions which every Virginia lawyer (who does this work) knows to be invalid, and unenforceable. Such judicial decisiveness would make lawyers be better – write better, and be more thoughtful when crafting agreements which directly impact the lives of so many.
So for now – I disagree with the holding in Update v. Samilow, but it won’t be the first time I think a Judge missed an opportunity to clarify the law in accordance with related legal principles. Nor do I imagine, will it be the last time I disagree with a judicial ruling.
But don’t get out those blue pencils just yet – the law remains clear in one way – Virginia Judges will NOT be accepting the invitation to re-write your contracts.