Non-compete clauses and other so-called restrictive covenants are growing increasingly popular with employers. This poses a challenge to the existing structure of employment law and to business law attorneys.
Why? Because these clauses aren't just growing in popularity, they're also growing in scope. It's one thing for a large defense contractor in the Hampton Roads area to place restrictions on an employee's ability to take proprietary information to a competitor – most people think that's reasonable.
However, companies are getting more and more ambitious with these restrictions – one prominent example is the sandwich company Jimmy John's making minimum wage employees sign non-compete clauses restricting their ability to work for other sandwich companies.
Jimmy John's ended that practice after public outcry and an investigation from the New York attorney general's office. But it illustrates the point – non-compete clauses are growing in popularity, and they contribute to a significant power disparity between employers and employees.
How Non-Compete Clauses Affect You – Legally
As a result of these dynamics, courts are growing increasingly skeptical of non-compete clauses, and in many areas clauses like these in employment contracts are essentially un-enforceable.
That's not the case in Virginia. Courts in Virginia are still willing to enforce non-compete clauses and other restrictive covenants. However, the burden of proof is on employers to demonstrate that a non-compete clause should be enforced, and it's not easy for them to do so.
Courts in Virginia subject non-compete clauses to a three-part test. In order for such a clause to be enforceable, it has to meet the following three tests:
- First, the provision must be no more restrictive than necessary to protect the employer's legitimate business interest
- Second, the provision can't unnecessarily or severely restrict the employee's ability to find work and make a living
- Finally, the provision can't violate a clear mandate of Virginia public policy
This might seem like a fairly clear test, but it's not always simple. Courts have a fairly difficult task in determining if a specific provision is “more restrictive than necessary” or if it “unnecessarily restricts” an employee's ability to earn a living.
As a result, a court will go through extensive analysis of the economic factors involved to determine if the provision in question should be enforceable. They'll examine the employee's earning potential, the details of his or her industry, the centrality of his or her work to the employer's business and take into account a number of other variables as well.
It's difficult to overstate the importance of having our experienced business law attorney on your side in these disputes. Mr. Shoemaker will carefully look over your employment contract before you sign it and provide you with advice on whether or not the provision is fair and reasonable. And if your employer is trying to use an unreasonable non-compete clause to restrict your ability to make a living or to recover damages from you, we can protect your legal and economic rights.
If you need an experienced business law attorney in or around Hampton Roads, Virginia to help with your employment contract and any non-compete clauses within it, please call James H. Shoemaker, Jr., Attorney at Law today at 757-223-4580.