You invest hours, maybe years, into training an employee, only to have that person leave you to start a competing business. Even if that person simply goes to work for a competitor, the other company will benefit from the experience you helped provide. Worse, a former employee could put your own trade secrets to work against you, stealing the very customers you’ve worked hard to nurture.
A noncompete agreement could protect your own business from this type of activity. An employee signs a document agreeing not to work for or start a business in direct competition with yours. But for Virginia business, it’s important to know the legality of noncompetes so that you can ensure you’re drafting one that’s at least worth the paper it’s written on.
It Can’t Restrict Free Trade
As in many states, Virginia courts tend to closely scrutinize noncompetes for reasons to throw them out. The problem with noncompetes is that they restrict free trade, which is key to keeping the economy strong. If you run a business employing specialized pest control treatment technicians, for instance, and you say departing employees can’t work for a competitor, you’ve basically ensured that a professional can’t land work. In order for a court to agree to keep people from pursuing the only line of work they know, you’ll need to show very compelling reasons why this person working for a competitor will harm your business.
Get the Geography Right
In 2017, a Virginia Court shot down a noncompete that attempted to narrowly define a geographic scope. The problem in this case was that the employer addressed where the employee could not work in two separate clauses. In one, the employee was prohibited from working for a competitor in specific counties, while the other more broadly defined the limitation as any geographic area that the worker might have obtained confidential information on the employer’s activities. To hold up in Virginia courts, you’ll need to make that geographic limitation as narrow and specific as possible.
Protect Only Legitimate Business Interests
The law on noncompetes in Virginia is fairly straightforward. Businesses must show that the noncompete placed only the limitations necessary to protect legitimate business interests. Those protectable interests can be: trade secrets or other confidential information, protection from detrimental competition, and customer contacts and knowledge of methods of operation.
Legal expertise is the best way to ensure you’ve created a noncompete agreement that will be enforceable if you ever need it. But the more compelling a case you can make for your business needing the protection, the more likely you’ll be to be successful, especially if you’ve narrowed the scope as much as possible.