Non-compete agreements, while once rare, are becoming more commonly used by Virginia businesses to protect their competitive advantage in the marketplace. However, there are specific criteria that must be met for an agreement to be enforceable.
Non-compete agreements are typically used when an employer hires a worker who will have access to sensitive ideas, practices, or trade secrets. The agreement provides legal penalties if a worker later uses this information to start their own business or obtain employment from a competitor.
Traditionally, non-compete agreements have been associated with managerial employees. However, due to growing cases of employers using the agreements to limit the job prospects of entry-level workers, Virginia now prohibits businesses from asking low-wage employees to sign any form of non-compete agreement. Under HB 330 and SB 480, employees in Virginia earning less than the average weekly wage—$1,100 as of 2020—cannot be subject to non-compete agreements. Unpaid workers, such as interns and students, are also covered by these laws.
How to Create a Valid Non-Compete Agreement
Although asking certain employees to sign non-compete agreements is legal in Virginia, employers have the burden of proof when an employee has violated the agreement. They must show the employee caused direct harm to their business if they wish to impose legal penalties.
A non-compete agreement is only enforceable when the following statements are true:
- The agreement does not violate the clear mandates of established Virginia public policy.
- The restriction is “no greater than is necessary to protect the employer’s legitimate business interest.”
- The terms of the non-compete agreement will not cause undue hardship in allowing an employee to find another job or earn a suitable income.
It is crucial that you hire an experienced business attorney to review your non-compete agreement. Without clear, precise language, the agreement will not be enforceable in a court of law.
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If you need to speak with an experienced business law and succession planning lawyer, please feel free to contact us online, or call our Virginia Beach office to schedule your free consultation. We also have offices throughout Virginia, including Chesapeake, Newport News, Norfolk, and Suffolk, as well as northeastern North Carolina.