Are Covenants Not to Compete Enforceable in Virginia?

March 9, 2011, 10:39 AM

Despite what you may have heard via the rumor mill, covenants prohibiting competition by former employees may be enforceable in Virginia under the right circumstances.

Indeed, an employee whose duties involve contact with customers or whose position provides him with access to confidential business information may be prohibited from engaging in competition or pirating away customers after his employment is terminated. Therefore, employers should take note of any employees who may potentially pose a threat to the employer's business and consider requiring such employees to enter into agreements that include post-employment restrictions on competition. Of course, it is also important for employers to safeguard such agreements once they are signed.

For a covenant not to compete to be enforceable, it must be carefully drafted to prohibit only what Virginia courts will allow an employer to prohibit. Because the law is always changing in this area, it is important that you carefully draft and regularly review any agreements your company has with employees to ensure that these agreements are consistent with the law.

Departing employees can pose significant threats, so don't wait to find out after the fact that your company isn't properly protected or that your agreements are unenforceable. --David J. Sullivan