Virginia Non-Compete Law Blog

VIRGINIA LAWYER TO REVIEW EMPLOYMENT AGREEMENT / SEVERANCE PACKAGE / NON-COMPETE

2009-12-01T11:36:00.002-05:00

Do you need a Virginia attorney to review one of the following?
- Non-Compete Agreement
- Severance or Separation Agreement
- Employment Contract
- Non-Solicitation Agreement
- Confidentiality Clause

Although our firm is located West of Charlottesville in Roanoke, we can review and advise Virginians all over the Commonwealth. Chances are good we can review the agreement within 24 hours of your call, and, that our hourly rate is less than most attorneys in Richmond, Tidewater and Northern Virginia.

If you need a Virginia Attorney today to review your agreement - give us a call. After all, Mr. Frith wrote the book on Non-competes, and is happy to give you a free copy by contacting Gail in our office, 540-985-0098. We hope to hear from you and assist you during this difficult situation.

LEAVING YOUR JOB AND CONTACTING CLIENTS

2009-12-01T11:27:00.002-05:00

You have spent years building a "book of business" which includes vendors, clients, suppliers etc. Many weekends away from your family have been dedicated to meeting and making new business contacts and conventions and meetings.

For what? Now your employer says you cannot take those clients with you. Are they right? Is that legal?

PLEASE READ YOUR NON-COMPETE. You may have agreed to this.
Could you try to keep your clients? Yes, we can help you do that - negotiate a release or buyout of your non-compete, but if you leave and assume the clients are yours, I fear you will end up in Court quicker than you can form a new business.

Know your rights, contact an attorney that understands the legal issues regarding a Virginia employment agreement. Better to know now that be served with a lawsuit on Christmas Eve (and yes - that does happen).

TIS THE SEASON - FOR SAYING TOO MUCH

2009-11-30T09:54:00.004-05:00

Tis the Season, right? The Season for office Christmas parties and cocktails and people saying too much to their colleagues.

I remember one office Christmas party many years ago that involved inappropriate jokes and alcohol. People were overly friendly and a few hilarious memories were made.

But can you imagine with me how these informal activities could lead to litigation?

Employee Fred has a few drinks and tells Sally from HR that he would like to take her to dinner. Sally says there is an office policy that you cannot date colleagues.

Fred says "I won't be a colleague for long - I am starting my own business."

"Wow," says Sally, impressed with his tenacity. "What kind of business?"

"I can make a heck of alot more money selling Widgets for myself and do a better job that these $%^(^ Clowns!" Fred exclaims. "Three of our suppliers and clients are already on board. Hey, maybe in a few weeks you could come work for me too."

Sally, still impressed, but now concerned, says "Fred - what about your non-compete? Non-solicitation clause? Aren't you worried?"

And you know where it goes from here. Fred leaves, and Sally tells management he is competing.

Now, Tis the Season for many things but I doubt you want to add employment litigation to your list. Call us first. If Fred calls here, I will certainly help him out of this very sticky situation and encourage him to act appropriately.

Virginia Employment Contracts

2009-11-28T08:00:00.003-05:00

Are employment contracts in Virginia legal?

YES.

Are they binding?

YES - but if a provision in the Contract is unreasonable (ie - noncompete provision), a Virginia court could find the provision is not binding.

Are contracts binding in a right to work state?

Yes, Again, right to work only means you can't be forced to pay union dues. Employment agreements have nothing to do with "right to work state."

What are your obligations under Virginia law without an employment agreement? There are many:

1. You will not divert business away from your current employer (that means starting your own company and taking clients while still employed) - Fiduciary Duty

2. You will not use confidential information for your own benefit - Trade Secret Act

3. You will not harm the reputation of your employer - Defamation

4. You will not take employer's property and use it for your benefit- Conversion

Often times employment contracts contain language regarding the above duties. Even without a contract, there are certain activities you can and cannot do under Virginia law.

Want to know more? Contact an attorney who can tell you what your agreement means, and what obligations you have under Va law.

CUSTOMER LISTS AND NON-COMPETE AGREEMENTS

2009-11-24T10:11:00.002-05:00

I was on a corporate law firm website today. The firm represents employers and companies in employment litigation.

They advertise that the first step when an employee leaves and there is the threat they will breach their non-compete agreement, is to "write a firm cease and desist letter" "demanding the return of all company information including customer lists."

Yes employees, this is exactly what your ex-employer Virginia Company Inc., LLC will do when you leave. They will attempt to scare you into submission.

Then they will ask customers if you have tried to solicit their business. They will also ask when you started soliciting business.

If you quit on Nov. 23, 2009, but sent an email to customers on Nov. 17, 2009 telling them about your great new business starting Nov. 24, 2009, you may be facing a multi-count lawsuit.

Employer will send a cease and desist letter, and if you don't fall in line and close your new business, they will file suit alleging the following:

(1) Breach of contract - you competed after you signed an agreement stating you wouldn't;
(2) Trade Secret Act - you used confidential information, ie, customer lists, without permission of the company which deems such information to be trade secret and proprietary.
(3) Breach of fiduciary duty - you attempted to divert business from Virginia Company Inc., LLC while still an employee.
(4) Tortious interference of contract - you attempted to have a third party break their contract with Virginia Company Inc., LLC, and send the business somewhere else.

Yikes. Now what. How should you respond to the Cease and Desist letter?
Are customer lists really proprietary and protected under Virginia Trade Secret Act?
Could Virginia Company Inc. LLC really sue you for 4 business torts when you have only been trying to get business for 1 week?

They have attorneys on their side advising what to do, say and how to proceed - you should too.

HOW TO GET AROUND YOUR NON-COMPETE

2009-11-23T10:23:00.002-05:00

Many Virginians want to know how they can work around their non-compete.

I have had some very creative clients who have thought of unique ways to get around their non-compete agreements. Yes, I mean, compete without it appearing that they are competing.

Here are some failed ways to "get around you non-compete."

1. Start your own company and hire yourself out as an independent contractor or have the new company contract with your company.
Goal - Not breach the agreement because you personally are not performing the work, your company is.
Result - they get sued and both the ex-employee and their new company are named in the lawsuit.

2. Move.
Goal - If your address changes you are no longer in the geographic area.
Result - You get sued because the restriction involves where you work and clients you serve, not where you live or the mailing address of the business.

3. Lie and say they are leaving the industry.
Goal - buy extra time to get things started before ex-employer finds out.
Result - When (not if but when) employer finds out, they assume you lied about many things and so they come after you with an aggressive lawsuit.

Although I appreciate creative clients, not one single creative solution has ever worked out well for clients trying to avoid their non-competition agreements.

The only way to be safe from litigation is (1) don't breach the agreement; (2) get a release from the agreement.

It is also advisable to ask an attorney for help. A potential client told me last week she had done research on her business and believed based on her research, that the non-compete was essentially invalid. Wrong assumption and now she is responding to a cease and desist letter and possible litigation during the Holidays.

THE UNIVERSITY OF VIRGINIA MEDICAL CENTER REQUIRING NON-COMPETES

2009-11-22T13:54:00.002-05:00

The University of Virginia Medical Center is adding “non-competition” clauses to the employment agreements of its 800 clinical faculty members. Under the new policy, clinical faculty involved in primary care — such as pediatrics or family medicine — are prohibited from practicing medicine within a 15-mile radius for one year after leaving employment with UVA. Clinical faculty who practice in more specialized fields cannot work within 50 miles for a year after leaving UVA.

This is bad policy and bad medicine! Everyone of those 800 doctors better think long and hard BEFORE signing away (potentially) their right to determine their future medical careers.

AOL and NON-COMPETES

2009-11-19T10:46:00.002-05:00

Breaking news on Wallstreet Journal Online today, AOL will fire 1/3 of work force.

That is devastating for Northern Virginia. It is also devastating for those individuals who have non-compete agreements with AOL and will soon be out of work.

Will AOL do the right thing and release these employees from their restrictive covenants so that they can support their families?

Only time will tell. In the meanwhile, let us know if you need to know your options as an AOL employee with a non-competition or non-solicitation agreement.

WHO IS THIS?

2009-11-18T15:22:00.002-05:00

QUESTION: Who is this lady?

1. She is your ex-employer's IT department who was asked to examine your blackberry and laptop 10 minutes after you resigned and these items were returned. She is building a lawsuit against you for breach of contract and Trade Secret violations.

2. She is your old colleague who was emailing herself at home, copies of client lists two weeks before she planned to quit and start her own consulting company.

3. She is your non-compete attorney, anxiously awaiting the Court's Order as to whether or not your non-compete is binding as a matter of Virginia law.

4. She is your wife checking the bank account to see how much is left after you quit one job to work for a competitor and then were fired when the new company learned about your binding agreement.

5. She is an organized job applicant who is calling Frith Law Firm to have a non-compete reviewed before she signs it.

ANSWER: All of the above.

VIRGINIA VICTORY FOR EMPLOYEES IN NON-COMPETE

2009-11-17T15:56:00.002-05:00

For many months now I have been closely following a case in the ED of VA Federal Court. Deltek v. IUVO, is essentially a case where employees left and started a competing business.

Deltek, their ex- employer, came out swinging with trademark, breach of contract, tortious interference of contract claims etc. against a number of ex-employees that started the competing business, IUVO.

Just yesterday, the Federal District Court ruled that the Non-compete provisions of the contracts were unreasonable as a matter of law, thereby granting the Employee's motion for summary judgment.

"In this case," Judge Trenga writes "non-competition provisions in each of the individual defendants' noncompetition agreements, in effect, prohibit defendants from being employed in any capacity by a company that is a Deltek
competitor, whether or not their own particular job responsibilities at such a competitor are part of that company's activities competitive to Deltek's business activities and regardless of whether Deltek's proprietary information relate to their employment activities."

Such restrictions the court concludes, "are broader than [Deltek's] legitimate business interests require, are not reasonable from the individual defendants' perspective and are not reasonable as a matter of public policy."

Since the agreement is unreasonable, it is not relevant whether or not the employees breached the agreement.

"For the above reasons,this Court has found the individual defendants' non-competition agreements unenforceable and any breach of those agreements by the individual defendants, even if induced by other defendants, is not actionable, and there is an absence of evidence to support a claim that any defendants otherwise induced a breach of any valid Deltek contract."

Lets hope that Deltek will see the writing on the wall and walk away from this one. Lets hope they do the same in the other cases they have oending against ex-employees who are just trying to make a living for their families.

WAY TO GO IUVO - Congrats.

We are so glad for this outcome and wish you all the best. Happy Competing!

TRENDS IN VIRGINIA NON-COMPETE LITIGATION

2009-11-16T09:20:00.002-05:00

We are seeing sad trends in Virginia businesses.

1. New Non-compete for old employees
Employees after years and years of service, are being asked across the board, to sign non-compete agreements and or more restrictive non-compete agreements.

Often times HR directors are sending emails to all with the attached agreement, and telling employees they have 24 hours to sign and return. When employees naturally inquire as to what happens if they refuse to sign, they are being told, again by HR and not management, refusal to sign will lead to being let go.

Employees feeling helpless, sign.

OUR OPINION: Don't just sign it. Speak to other employees, see if a group wants to pay for an attorney to have the document(s) reviewed. Go to HR in a group to express concerns. Don't let HR define your employment. See if an attorney drafted the agreement - could your attorney discuss it and negotiate it with the company's attorney.

WHY? No one wants to lose all of their employees over a contract issue. No one wants a few key employees to walk because of a new agreement - often times, they will respect your concerns and changes will be made.

2. Scape Goat

We are also seeing companies make strategtic decision to file suit against one employee who left on bad terms, to teach the other employees the lesson of what happens when you breach your non-compete.

You don't want to be the scape goat - but if you have left on bad terms, and plan on breaching your agreement, then you will need counsel. Guaranteed your ex-employer has had attorneys looking at your actions for weeks maybe months - best offense in Virginia could be a good defense, or alternatively, a good offense.

3. Unwillingness to release even if fired

Yes, it is a recession. Some say up to 17% of Americans are looking for work. This means many more are losing jobs and have non-competes which limit their options. Out of fear, we are seeing companies refusing to let employees they have just fired, out of non-competes.

We have helped employees negotiate releases and once you know your options, you may even be able to convice your ex-employer, they can't win in court.

The economy is doing strange things to employers and how they treat employees. Be prepared and know your options, before its too late.

BEFORE YOU GET THAT CEASE AND DESIST LETTER FROM....

2009-11-15T14:53:00.003-05:00

Dear financial advisors - before you get that cease and desit letter from [INSERT NAME OF FINANCIAL HOUSE HERE], review your agreement and consider your exit actions.

Are you in breach of your non-compete? Have you already contacted customers? Did your new job say they had to have your old client list or book of business?

Have an attorney review your noncompete. Broker Protocol only applies when both houses are signatories, and, you played by the rules.

VIRGINIA LAW ON NON-COMPETES (Case by Case)

2009-11-14T10:01:00.003-05:00

There is not a section of Virginia Code dedicated to employment agreements. Nor is there a litmus test which allows employees to determine whether or not the agreement they have signed is enforceable.

The law in Virginia on the subject is found in common law or case law. This means, that each case, contract and relationship will be analyzed by the court individually.

Unless your ex-colleague just litigated whether or not the same non-compete you signed is reasonable, you have to re-invent the wheel on each and every non-compete case. That is why employers often add allegations like trade secret violation, conversion, etc. If they have to litigate the breach of contract issue, might as well add in a few extra claims to scare the employee? (Or at least this is the conversation I assume attorneys have with their corporate clients).

Employees should also be prepared with legal counsel if they are going to leave and break an agreement.

If each contract is considered individually, so will the facts of your situation. So when people call us and ask whether their contracts are valid under Virginia law, we tell them we review the agreement, advise future action, defend in court, but ultimately that is up to the judge.

CUSTOMER LISTS

2009-11-13T14:57:00.004-05:00

Customer Lists are very big items to companies. It doesn't matter whether the company is a general contractor, stock broker, or commercial wholesale or retail supply business. Companies just do not want their employees walking out of the door with their customer or client lists and then contacting or soliciting those customers for their own newly started business or for an already establish competitor.

How do companies protect themselves? They do it by placing non-solicitation provisions in their employment agreements. They do it by inserting provisions in non-compete agreements which prohibit the employee, after leaving the company, from conducting business with any previous or existing customer of the former employer. Some business even go so far as to prohibit the departing employee from soliciting business from a person or business which could have become a customer of the employer.

If you are leaving your current job and intend on contacting some of your old company's customers or clients, you better read your employment agreement and consult with a knowledgeable attorney.

MAD MEN - FOILED

2009-11-12T15:35:00.003-05:00

Sorry, no commentary today on the Mad Men Season Finale because it's not yet available on my on demand.

Instead - lets have a contest.

Winner gets Dan's book, How to Beat your Virginia Non-Compete Agreement, for FREE!

Contest is: In the comments section, share the worst non-compete you have ever had. Not the name of the company, but include: years, geographic scope, and terms of the agreement.

Worst non-compete wins the book.

Winner announced on Monday Nov. 16, 2009.

Ok, so the joke is on me. The book is free and anyone can order one by calling or emailing Gail Barrow in our office at 540-985-0098 or gbarrow@frithlawfirm.com

MAD MEN and NON-COMPETES

2009-11-11T09:01:00.002-05:00

Ok, so I will admit I am not a daily TV watcher. That being said, I have heard from many people that the Season Finale of Mad Men was great, and somewhat relevant to my work.

So, here it is - tonight will be the screening of the Finale and tomorrow the commentary.

Do I really believe that non-competes were an issue in 1950's America?

YES, I do. They certainly were an issue in Virginia in the 1950's and early 1960's. The two cornerstone Virginia case on non-compete law were decided in 1956, HOWARD A. MEISSEL v. JAMES D. FINLEY, II, ET AL, and 1962, RAY O. RICHARDSON v. PAXTON COMPANY.

Do I think non-competes would have been introduced in advertising agencies where client relationships tend to create business?

Absolutely.

That being said, lets watch and discuss tomorrow.

And, in the meanwhile if you have a non-compete that needs to be reviewed and or you are facing non-compete litigation, I will be at the office and available to help. Just don't call tonight, I will be at home watching TV and claiming it is work.

NON-COMPETE LAW IN VIRGINIA

2009-11-10T08:48:00.003-05:00

Want to know what your rights are? Whether you need an attorney? Want to know whether you can beat your non-compete.

Dan wrote the book to help Virginia employees like you - want a free copy? Call Gail at Frith Law Firm today at 1-866-985-0098 for a free copy.

RELENT - RELAX - RELEASE

2009-11-09T15:09:00.002-05:00

Do you remember that scene in Steve Martin's Father of the Bride remake when Steve is meeting the inlaw's at their Beverly Hills mansion and is screaming at the two growling dobermans - "Relent, Relax, Release?" Of course you don't. Anyway, watch the movie and you will know where I am going.

Stevo doesn't know which word will get the dogs to back down but he knows there is one word they will respond to.

Non-competes are very similar. Sometimes, what you name something will effect the response you get.

You ask your employer for a Release from your non-compete, and they may say no, and explain why it is so important you not compete.

Or, you could take a less aggressive approach, tell the employer where you are going and if it is not really competition, you could ask them to let you work at that firm - but keep the non-compete in place. No release - just turning a blind eye.

Even better, you could tell them you will be happy to not breach the release, but would like to give them a little something for their troubles and offer a buyout. Still not a "Release" but everyone wins.

Only you know your employer and what word, what approach will help in this circumstances. When you call our firm to discuss your non-compete, also share details about the personalities on the otherside. Afterall, the right word or name and you may be able to move on.

PAST NON-COMPETE CLIENTS

2009-11-05T11:56:00.003-05:00

Want to read what our past employment litigation / non-compete clients have said about our services?

Dan's AVVO profile

Lauren's AVVO Profile

Need help on your non-compete agreement today? Call us locally in Roanoke, 540-985-0098 or elsewhere in Virginia 1-866-985-0098.

NASTY GRAM #1 - LETTER FROM MANAGEMENT

2009-11-04T09:40:00.002-05:00

Nice letter.

Is it legal to do that in Virginia? Yes, probably.

Is it ethical? I would say no.

As an employee, do you have options? Yes, probably.

Can our firm review a non-compete agreement with less than 1 day notice? Most days that we are not in Court, one of us is available to review an agreement, please call as soon as you get the letter demanding you sign the non-compete, so that we can discuss.

WHO PAYS FOR NON-COMPETE LITIGATION?

2009-11-03T14:08:00.005-05:00

Maybe you are the best in your industry - and highly sought after expert on X. You get a call from company ABC INC. LLC, who says they know you are the best and they want to hire you. They offer you $1,000,000 more per year and great stock options. Your ego has been thoroughly inflated and you say, "Fellas, sounds great but I have a non-compete agreement." (Which as an aside, is always good to disclose sooner rather than later).

ABC Inc., LLC says "No problem, we figured you would, we will take care of it."

Well, hot shot expert in industry X - before you jump ship, we recommend you get something in writing, or more specific as to how ABC INC. LLC is going to "take care of it."

Will they:

1. Help you buy out your non-compete?
2. Still give you a job if/when you get sued?
3. Pay for your attorneys fees?
4. Pay you to not work during your non-compete agreement so you are not in breach?

Starbucks executive Twohig just went to Dunkin Donuts, allegedly in violation of his non-compete. Let me bet the farm, that he knew exactly what Dunkin was willing to do to assist him in the transition.

You would had to jump ship and begin your transition to a new job, only to hear that ABC's new board (well, techinically they don't have a board if they are an LLC) is risk averse and unwilling to pay for your attorneys fees.

WHAT DO YOU DO WHEN YOU GET "CEASE AND DESIST" LETTER?

2009-11-02T07:51:00.002-05:00

Yikes. Bad day. Received a letter from ex-employer (we will call him Virginia Incorporated Company, LLC - or VIC, LLC) that says the following:

Mr. Smith:

It has come to our attention that you are currently working for Virginia Company Inc. in breach of your employment agreement, namely paragraphs 6-8, non-competition.

According to the terms of the agreement, you are not permitted to work for a competing company with 100 miles, and for two years after your employment with our company ended.

Should you continue your employment, and therefore you breach after this Friday, November 6, 2009, we will have no choice but to file suit and seek an injunction against your current activities.

Please have Virginia Company Inc. send a letter confirming you are no longer employed.

Yours,

BOSS MAN VIC, LLC.

Ok, so what do you do? Here are the most popular options:

a. Ignore the letter
b. Send a snotty nasty gram letter back
c. Show the letter to new employer
d. Call an attorney to evaluate your options

While a and b are popular, I highly recommend you NOT chose those options. I often get calls from folks who go the ignore route, until 24 hours before their Answer to a lawsuit or letter and then they are shocked when we cannot represent them.

As soon as you get a cease and desist letter, let someone know - preferably someone who can help, like an atttorney.

FREE BOOK ON VIRGINIA NON-COMPETE AGREEMENTS

2009-10-30T16:24:00.001-04:00

Virginia Non-Compete Law Blog: VIRGINIA NON-COMPETE BOOK

SCARY THOUGHT

2009-10-30T16:18:00.002-04:00

Forget chain saws and evil spirits. You know what really scares me?

A badly written non-compete agreement. You know the type.

Some HR director drafts an agreement based on cutting and pasting language from the Internet - and then asks 100 employees to sign it, no explanation, no chat, no bonus - just "SIGN HERE."

Well, employees are literate and thankfully read the agreement, wondering WHAT DOES THIS ODD DOCUMENT MEAN?

Options:
1. Ask what it means and get opinion in writing.
2. Ask to re-write it such that it actually does make sense.
3. Sign it and pray to God that a Virginia judge also thinks it is terribly written and unenforceable.
4. Don't sign it and see what happens (yes - they can fire you for not signing a non-compete agreement).

Scares you, doesn't it. It certainly scares me this Halloween eve.

VIRGINIA RIGHT TO WORK STATE

2009-10-28T10:57:00.002-04:00

I heard it again yesterday.

PROSPECTIVE CLIENT: "They can't fire me for refusing to sign a non-compete agreement. Virginia is a Right to work state."

Hmm.

ME: "Sir, the phrase Right to work is one of the most mis-understood cliches in the Commonwealth. It does not actually mean you have a right to work, or any legal protection from being fired should you refuse to jump through employer hoops. All it legally means, is that you can't be fired for refusing to pay union dues."

PROSPECTIVE CLIENT: "That can't be right - I have heard for years that Virginia is a RIGHT TO WORK STATE."

ME AGAIN: "It is, but all that means is that Virginia has adopted provisions of the Taft-Hartley Act, which prohibits agreements between trade unions and employers making membership or payment of union dues or "fees" a condition of employment, either before or after hiring."

PROSPECTIVE CLIENT: "So you are saying if I refuse to sign this terrible agreement with a ridiculous non-compete, they can fire me and there is nothing I can do."

ME: "Well, yes. They can fire you for that. They can fire you because they don't like the color t-shirt you wore to work yesterday or the fact you are a Redskin fan. And no, there is no legal right that you have to sue simply because you were fired."

This is my favorite part of the prospective client conversation -

PROSPECTIVE CLIENT: "So I am basically screwed."

ME: "Well, no. You have some options. (1) Try to negotiate terms of the contract; (2) Refuse to sign and see what happens; (3) Quit and look for another job; (4) Have a conversation with said boss about how this situation leaves you few options.

At this point client usually hangs up, shocked.

So please, VIRGINIANS - don't be surprised. You have few rights, but you do have some options. Let us help - we can review the contract, discuss and draft new language, be your advocate with boss (if the situation allows) etc.

Better to know your options, than not.