Hey, Virginia Employee! Look Before You Leap

So you want to start a company? The great American dream can be yours, right?

What kind of company? What kind of clients? What kind of services? Do you hope to stay in the same business you are in now? Serve the same clients or customers? Use your years of experience to start a better business?

If your plan is to stay in the same business you are in now and serve the same customers you serve now, you may be violating Virginia law by starting your own company.

Before we cover tips for departing employees, consider for a second the following: lawyers are the only profession that bans non-compete agreements, or so the American Bar Association has implied. Isn’t that crazy?

Lawyers can take all their clients with them to open a new office. Happens all the time. No one cares and typically, everyone is just fine at the end of the day with clients getting to pick where their business goes.

But ironically, non-compete agreements exist in almost every other industry.

Sales. Medicine. Personal Service. Retail. Manufacturing. Development. You name it. And you are bound by contractual rules that prohibit you from serving clients, customers, etc. in the area you live, in the business you know.

Here are some simple rules you should know before you try to start your own business:

Every state law is different. So you need to read your contract and see what state law applies. About 90% of all contracts provide for some kind of choice of law – or state what state law applies.

Plan ahead. It is always better to know your options and obligations before you start that new company. After all, what happens if you start the company and get sued?

Your contract is enforceable until a judge says otherwise. And getting your contract before a judge is expensive. So you need to operate under the assumption its reasonable and binding.

Have a lawyer look at it, someone who actually knows your state law on non-competes – and not your cousin’s boyfriend who is in law school.

Life isn’t always fair. Sometimes you may be bound by a contract, or silly rules that don’t  make sense. So do yourself a favor by knowing what the rules / laws are before you leave your job and start a new company.

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.