ARE NON-COMPETES ENFORCEABLE IF YOU ARE FIRED?

We get this question a lot. The client signs a non-compete agreement when hired 4 years ago and then is terminated by the employer. It doesn't matter if you were "fired" or "furloughed" or "terminated" or what ever you want to call it....the legality and enforceability of the non-compete is usually not effected.

In determining whether a non-competition agreement is valid and enforceable, Virginia courts will apply the following criteria:

(1). Is the restraint from the standpoint of the employer reasonable in the sense that it is not greater than is necessary to protect the employer in some legitimate business interest?

(2). From the standpoint of the employee, is the restraint reasonable in the sense that it is not unduly harsh and oppressive in curtailing his legitimate efforts to earn a livelihood?

(3). Is the restraint reasonable from the standpoint of a sound public policy?

NON-COMPETES AND DUNDER-MIFFLIN

I am addicted to watching Michael Scott run the paper products company, Dunder-Mifflin, in the CBS show, Office.

If you missed the most recent show, Michael Scott has been "let go" from his job at Dunder-Mifflin and has plans to start the Michael Scott Paper Company. My misgivings as to whether Michael can actually run a profitable business aside, I wonder why Dunder-Mifflin failed to require Michael to sign a non-compete agreement? Also, Michael's attempt to get other Dunder-Mifflin employees (Jim and Pam) to join his new business might have been stopped had Michael signed a non-solicitation agreement.

My Take: I don't know the law in Pennsylvania (Dunder-Mifflin is located in Scranton), but if it is similar to the law in Virginia, the bosses at Dunder-Mifflin probably realized overly restrictive non-competes and non-solicitation agreements are unenforceable.

EMPLOYMENT CONTRACT ADVICE IN VIRGINIA

I just saw a friend at the bank who said her brother, age 60, just lost a job with a large southern title examination company where he had been doing real estate closings for years. No severance, nothing.

Can he easily find a job? I doubt it. Could he be hampered by a Non-Compete? Absolutely. Although they are rare in law, you see them at most corporations.

If you are facing a layoff, don't assume your non-compete will be made void. Don't assume it is unassignable. Don't assume the company won't come after you.

Try to get rid of it, before you leave.

Need help - call us, we would be happy to help.

Lauren

SURGEONS IN OHIO FREED FROM NON-COMPETE

It is not Virginia, and each state is a little different, but a judge in Springfield, Ohio recently found a non-compete involving surgeons to be unenforceable.

The surgeons, who are physician-investors in the soon-to-open Ohio Valley Medical Center, filed a complaint asking the court to find their non-compete with Springfield Surgery Center was unenforceable. The surgeons were previously limited partners in Springfield Surgery Center (SSC) and had signed a non-compete with SSC.

In holding the non-compete unenforceable, the found the following facts to be significant:

* Ohio law provides that restrictive clauses against physicians can be detrimental to public health care....a similar line of cases exists in Virginia under certain situations.

* The terms of the restrictive clause was too long.

* Ohio Valley Medical Hospital is a "surgical hospital" and not an "outpatient surgery center," and therefore the language of the restrictive clause did not not apply.

My Take: Virgina Courts may have reached the same decision.

PLEASE GET IT IN WRITING

Did your employer promise they would not seek enforcement of your non-compete?

Did she promise you a bonus in exchange for signing a non-compete?

Did your job duties change, such that you should get a raise?

Did the boss say "not to worry" because if they had to lay you off due to the economy, you could work for anyone, despite the non-solicitation agreement.

I have some bad news...

IF THE ABOVE IS NOT IN WRITING - IT DIDN'T HAPPEN. The promises weren't made, and your employer may come after you with what you agreed to in writing, not "conversations that occurred later."

So please, don't be rude, but if promises are made, ask that they be put into writing as part of your employment contract. After all, it is in every one's best interest to be on the same page.

CAN THEY FIRE ME FOR....?

In Virginia, can my employer:


1. Fire me for not signing a non-compete? YES

2. Fire me for not telling them I was under a non-compete when I took the job? YES

3. Fire me for discussing possible breach of my non compete with a co-worker? YES

4. Fire me because they don't like my yellow sweater? YES

Virginia is a "right to work" state which really means "at - will" you can be fired for any non-discriminatory reason. So as long as it is not related to age, race, gender or religion - they can fire you, and non-competes are not age, race, gender or religion.

So be aware - yes they can fire you for not disclosing, not signing, planning a breach etc.

ROMANCE AND EMPLOYMENT AGREEMENTS

I am a romantic...and want to share with you a love story:

Boy meets girl.
Girl immediately likes boy.
Boy is head over heels for girl.
They date the obligatory 9 months, he calls her Dad and asks for permission to marry.
Suspecting something is going on, Girl dresses extra special for Saturday date, perfume, heels, the works!
When boy and girl have finished their bottle of Opus One and eaten a lovely meal, boy gets down on one knee and says
"I would like to spend the rest of my life with you."
He pauses, pulls a file out of his jacket and says "Would you sign this pre-nup?"
___

Not the romantic story you expected, is it?

Well many people are experiencing this in the employment context.
Wined / Dined / recruited and when they are ready to accept - they are handed a noncompete. Essentially a pre-nup, spelling out who can do what when the relationship ends.

Well that's just business, right? MAYBE - but even if it is just business, you need to take it seriously. Ask early on in the process, do they require employment contracts - what are the terms?

Once you feel "pursued" a little bit of commonsense can give way to excitement, or desire for the job. So please, ask before you accept the job and you won't feel as duped as my friend in the above story.

GARDEN-LEAVE EMPLOYMENT CONTRACTS

What are Garden-Leave employment agreements? They are agreements which pay the terminated or departed employee for not competing with his/her old employer.

Want an example? In Bannister v. Bemis Co., Inc., (2009 U.S. App. LEXIS 3648, 8th Cir. Feb. 25, 2009) a Garden-Leave clause was examined by a federal court in Arkansas. Bannister served as director of product development for Bemis. He signed a non-compete agreement which contained an 18-month post-employment restriction against working for a competing business. However, Bannister's contract provided he could receive his base-salary from Bemis if he was "unable to obtain employment consistent with his abilities and education solely because of the non-compete clause." This is called a "Garden-Leave" provision.

Bannister requested, several years later, a release from his non-compete clause so he could join Mondi, a Bemis competitor. The request was refused by Bemis. Bannister then sought his Garden-Leave pay from Bemis, claiming he could not find a suitable position because of his non-compete. He provided monthly statements to Bemis regarding his efforts to find work. There were other issues in the case but Bannister won on his argument and the court awarded damages in the amount of 9 months of salary for the time Bannister was unable to find comparable work.

My Take: If you bring highly sought after skills to you job and the employer wants you to sign a restrictive non-compete agreement, request a Garden-Leave provision in your employment agreement.