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Simple Clauses Of Non Compete Agreement
Simple Clauses Of Non Compete Agreement
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Enforcement of Non-Competition Clauses in Employment Contracts in Virginia
Introduction
At common law, non-competition agreements once were unenforceable as a restraint of
trade. However, since early this century Virginia courts have recognized and enforced such
covenants in employment agreements and other contracts. A three-part test determines the
reasonableness of a non-competition agreement. This test considers the scope of protection
afforded the legitimate business interests of the employer, the restraint on the employees
ability to earn a livelihood, and the effect of the restriction on the public interest. Traces of the
courts skepticism towards such agreements can be seen throughout the case law. For
example, where there is ambiguity in the language of these agreements, the court will
construe the covenant in the way most favorable to the employee.
Test for Enforcing Non-Competition Agreements
In Virginia, a non-competition agreement in an employment contract is subject to a three-
prong test to determine its enforceability. Virginia courts look to the reasonableness of the
clause to ensure that it is: (1) no greater than necessary to protect the legitimate business
interests of the employer, (2) not an unduly harsh or oppressive restraint on the employees
efforts to earn a living, and (3) consistent with sound public policy. Meissel v. Finley, 95
S.E.2d 186, 188 (Va. 1956). Application of this rule is more difficult than it may appear, as
each agreement must be considered in light of the circumstances and conditions under which
it is to be performed.Worrie v. Boze, 62 S.E.2d 876, 881 (Va. 1951) (enforcing a restraint on
competition for two years within a 25-mile radius of the Arthur Murray dance studio by a
former dance instructor).
Looking at the first prong of the test, the court has said that the focus of the inquiry must
be on the effect of [the prohibited employment] upon the business sought to be protected.
Stoneman v. Wilson, 192 S.E. 816, 819 (Va. 1937). In Stoneman, the court explained that the
nature of the business and the employees control of the business were necessary factors to
consider. Id. at 819. The court held that a former employee and stock holder of a hardware
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source: virginia.edu
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