Total Articles: 4
Virginia Supreme Court Overturns Long-Standing Precedent on the Enforceability of Noncompetition Covenants in Employment Agreements
Executive Summary: The Virginia Supreme Court recently struck down a noncompetition covenant contained in an employment agreement, overruling a 22-year-old precedent. Despite reasonable geographical and durational restrictions, the Court held that the noncompetition covenant was unenforceable because the scope of the former employee's restricted activities was overbroad.
Non-Compete Agreement Barring Work for Competitor “In Any Capacity Whatsoever†Unenforceable in Virginia
Finding a non-compete provision in an employment agreement overbroad on its face and therefore unenforceable, the Supreme Court of Virginia has affirmed dismissal of an employer’s breach of contract claim against a former employee. Home Paramount Pest Control Cos., Inc. v. Shaffer, 2011 Va. LEXIS 222 (Va. Nov. 4, 2011). While acknowledging that it was invalidating a provision that was identical to one it had enforced for the same employer more than 20 years earlier, the Court said the Virginia law on non-competes has evolved since then and overruled conflicting portions of its 1989 opinion.
Virginia Supreme Court Further Narrows Non-Compete Covenant Enforceability
In Home Paramount Pest Control Cos. v. Shaffer, No. 101837, 2011 Va. LEXIS 222 (Nov. 4, 2011), the Virginia Supreme Court ruled that a covenant not to compete was overbroad and unenforceable, even though it was identical to a covenant the court had upheld 22 years earlier in Paramount Termite Control Co. v. Rector, 238 Va. 171 (1989). Acknowledging this, the court expressly overruled its holding in Paramount Termite.
Virginia Supreme Court Reverses 22-Year-Old Precedent in Non-Compete Case
A recent decision by the Virginia Supreme Court makes clear that when it comes to the use and enforcement of noncompetition agreements under Virginia law, “one size†does not “fit all†and that employers must utilize narrowly tailored agreements that reflect a position-specific, functional analysis in order for such agreements to be deemed enforceable. In Home Paramount Pest Control Companies, Inc. v. Shaffer, No. 101837, 2011 Va. LEXIS 222 (2011), the Virginia Supreme Court upheld the trial court’s decision to strike down the noncompetition clause in an employment agreement that the company entered into with one of its employees, who in 2009, resigned his position and soon went to work for a competitor. Through this decision, the Supreme Court reversed its own, 22-year-old precedent, through which it had held that the precise language at issue within a noncompetition agreement was enforceable.
