Arlington/Main Office
2200 Clarendon Blvd.
Ste. 1201
Arlington, VA 22201
(703) 312-0410
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Fairfax County Office
6367 Rolling Mill Place
Ste. 102
Springfield, VA 22152
(703) 455-0046
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Norfolk/Hampton Roads Office
World Trade Center
101 West Main Street
Ste. 435
Norfolk, VA 23510
(757) 200-7900
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Roanoke/Salem Office
113 East Main Street
Salem, VA 24153
(540) 387-3476
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Staunton / Harrisonburg / Charlottesville Office
116 E. Beverley Street, Suite 2000
Staunton, VA 24401
(540) 886-0110
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Washington, D.C./Maryland Office
641 Indiana Avenue N.W.
Second Floor
Washington, DC 20004
(202) 386-7470
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A Look at Non-Compete Agreements
Q: What is a "non-compete" agreement?
A: A non-compete agreement is a contract between an employer and an employee that prevents the employee from competiting with the employer after the employee leaves the company. This includes prohibiting the employee from working for a competitior, so the agreements can be very limiting.
New employees often do not realize the significant consequence of entering into such an agreement, naturally assuming that the relationship will run smoothly. Many employees sign non-compete agreements with the mistaken assumption that they are unenforceable. As a result, employees often sign such non-competition agreements, wherein they agree to not work with the company's clients and/or competitors for a period of years after the conclusion of their employment, with little negotiation. A non-compete agreement should be negotiated with the same vigor as one negotiates salary.
Q: If I have signed a non-competition agreement, or are considering signing one, what is the legal standard that would apply to determine its enforceability?
A: Most states determine the enforceability of non-competition agreements under a so-called "reasonableness" standard. For example, in Virginia, a court will review the agreement under a three prong standard: (1) From the employer's standpoint, is it no broader than necessary to protect the company's legitimate business interests; (2) From the employee's standpoint, is the agreement unduly harsh and oppressive in precluding his or her ability to earn a livelihood; and (3) Is the agreement consistent with public policy? The agreement must be reasonable under all three prongs. Each agreement is considered under the particular facts of each case, depending upon the particular wording of the agreement at issue and the attendant facts of the case. As a general matter, such agreements are generally disfavored under the law of most states, and in such circumstances will be strictly and narrowly construed against the company and in favor of the employee. However, they are certainly enforceable if drafted correctly.
Each individual should carefully read and assess a proposed non-competition agreement before they accept an offer and submit their resignation to leave a job. Particularly in the sales field, a prospective employee should ask at the interview whether he or she would be expected to execute such an agreement. |
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