Virginia Non-Compete Agreement Template

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Updated June 29, 2022

A Virginia non-compete agreement restricts the ability of an employee from competing with their former employer. A non-compete is required to be for a specific time period, geographical area, and scope of activity. It is prohibited to enter into a non-compete with a low-wage employee or licensed attorney.

A non-compete must be “reasonable” while protecting the interests of the business and not be unduly harsh or oppressive to the employee.

Legally Enforceable?

Yes, a non-compete is legal in Virginia except for “low-wage employees” and licensed attorneys.

Source: VA Code § 40.1-28.7:8 & Rule 5.6

Low-Wage Employees

A “low wage employee” is described as a worker that earns “less than the average weekly wage of the Commonwealth.” The calculation is in accordance with VA Code § 65.2-500(b) and is reported quarterly at the Virginia Employment Commission.

Other Types

A “low wage employee” also includes:

  • Interns
  • Students
  • Apprentices
  • Trainees (employed)

Such positions can be with or without pay, at a trade or occupation in order to gain work or educational experience.

Penalties

If an employer decides to enter into a non-compete with a low-wage employee, they can be charged a civil penalty of $10,000 for each violation.

Civil Action

A low-wage employee may bring civil action to a court if an employer attempts to enforce a non-compete on them. Such a case must be filed within 2 years of:

  • Date the non-compete was signed;
  • Date the low-wage employee learns of the non-compete;
  • Date the employment relationship is terminated; or
  • Date the employer takes any step to enforce the non-compete.

Source: VA Code § 40.1-28.7:8

Other Requirements

When determining a non-compete, a court will evaluate 3 requirements for every agreement:

  1. Legitimate business interest. No greater than necessary to protect a legitimate business interest;
  2. Not harsh or oppressive. Not unduly harsh or oppressive in curtailing an employee’s ability to earn a livelihood; and
  3. Public policy. Is reasonable in light of sound public policy.

The employer bears the burden of proving the above factors.

Source: Assurance Data, Inc. v. Malyevac (2013)

Determining “Reasonable”

In determining an employer’s claims, a court will use 3 factors to determine if a non-compete is reasonable:

  1. Time period. The length of time the employee is held under the non-compete;
  2. Geographical area. The areas the employee is prohibited from engaging in the same business; and
  3. Legitimate business interests. If the non-compete is no greater than necessary to protect the employer’s business interests.

Source: Modern Environments, Inc. v. Stinnett (2002)

Continued Employment

If an employee is already working and is asked to sign a non-compete, the promise of continued employment is viewed as sufficient consideration.

Source: Mona Electric Group, Inc. v. Truland Service Corp. (2002)

Maximum Term

When selecting the time period and geographical area for a non-compete, keep in mind that the Supreme Court views “function, geographic scope, and duration” as elements of the restriction. (Home Paramount Pest Control Comp. v. Shaffer (2011)).

Employment

For the purposes of employment, 3 years has been determined reasonable. Although, in this specific case was only for a 1-mile radius. (Saks Fifth Avenue v. James, LTD (2006))

For larger geographical areas, 1 year and 60 miles has been deemed reasonable (New River Media Group, Inc. v. Knighton (1993))

In addition, 1 year and 50 miles have been deemed reasonable. (Update, Inc. v. Samilow (2018))

Sale of a Business

5 years and a 100-miles was deemed reasonable. (Musselman v. Glass Works (2000))

Partnership Dissolution

When dissolving a partnership, a non-compete period of 5 years was determined to be reasonable (Meissel v. Finley (1956)).

Blue Penciling

There is no record of a Supreme Court ruling that modified a non-compete restraint. In fact, the courts have made it a rule to specifically not “blue pencil” and amend overbroad or unreasonable agreements.

Source: Lasership, Inc. v. Watson (2009)

“Non to Compete” Definition

“Covenant not to compete” means a covenant or agreement, including a provision of a contract of employment, between an employer and employee that restrains, prohibits, or otherwise restricts an individual’s ability, following the termination of the individual’s employment, to compete with his former employer.

Source: VA Code § 40.1-28.7:8