Virginia Non-Compete Law Blog

HOW TO BEAT YOUR VIRGINIA NON COMPETE for your IPAD / IPHONE ETC

2012-01-16T14:18:00.002-05:00

Had a great weekend in Tennessee with new friends.

Met a hospital administrator from Ohio who told me his facility did not have non-compete agreements for physician employees because they thought taking care of their employees would be a better way to keep them, than scare tactics contained in contracts.

I think he is right and applauded his position.

I also met a woman who lives in Northern Virginia, who has a pretty big deal high paying job. She (upon learning what kind of law I practiced) said - "Well, they are not enforceable in Virginia, right? Virginia is a right to work state."

Ugh. I gasped.

Another smart person who has NO IDEA what right to work means but wrongly assumes it means non compete agreements are not valid.

While it is not really my job to be the evangelical about non-compete agreements (why I don't like them, what the law really is, etc..) Dan, and our new attorney Rob and I agree that education in this subject area of Virginia law is remains important.

No tent revival.
No commercial on during Judge Judy.

We preach the good news in an old fashion medium called the book. And our book, written to Virginians about the laws regarding non-competition agreements in Virginia, can be obtained either by downloading on amazon.com or buying the paper copy direct from our office.

$9 print - or $9 downloaded to your Iphone / Kindle / Ipad, etc.

How? Where? You must visit our amazon.com webpage where you can get our book HOW TO BEAT YOUR VIRGINIA NON-COMPETE, sent directly to your hand-held device.

This means you can read it tonight on your way home on the Metro. Or read it between playoff football games, or while your wife watches Downton Abbey and you pretend to care.

Anyway. To read the real news about Virginia law in this area - get your own copy of HOW TO BEAT YOUR VIRGINIA NON-COMPETE.

And I hope in years to come, that our collective preaching on the subject will be so effective that folks across the Commonwealth will know what their rights are, and I then I won't accidentally snort red wine out of my nose in shock at our continued ignorance on the subject.

NON COMPETES AND COLLEGE FOOTBALL

2012-01-10T10:59:00.003-05:00

I ran across this article this morning and it is excellent. Read it. Enjoy it. Attorney Michael Elkon, member of Fisher & Phillips, a large law firm with a National presence, explains why College football coaches can pick up and move, while the average person (think salesman, think engineer, doctor, etc.), is not permitted to work where he or she wants because of a non-compete clause.

We read about Starbucks suing Dunkin Donuts because an executive made the switch, allegedly taking trade secret information. But don't you think Nick Sabon knows a few things about LSU? Think maybe just maybe he is sharing that info with his now National Championship team? Isn't college football more important, and profitable, than coffee?

Here is the long and short of it. We in the United States LOVE our celebrities and hold them to lower standards. Business owners believe restrictive covenants are vital for business success, and they will spend money to enforce them against even low level employees. But we don't question it when a 20 million dollar a year state employee takes his know how to the "competitor" for 25 million a year?

Basically, I want consistency. And I want to live in a world where Universities, hospitals and businesses retain employees by treating them well. Not by holding threatening contracts over their heads.

And lastly, out of respect for my Father in Law, my Uncle in Law and all of the Ellermans of Winnsboro LA, GEAUX TIGERS. I am sorry for your loss but the Gumbo sure was delish!

ROANOKE VIRGINIA NON COMPETE ATTORNEY

2012-01-09T08:27:00.002-05:00

Imagine a divorce. The bad kind where people would rather fight than be reasonable. The kind where the only people who win are the attorneys because the financial cost of litigation, coupled with the emotional drain of battle wear the parties out.

Now, multiply in some additional hurt feelings, a few company owners that say they must fight for "the principal of it" and then you have employment litigation. Breach of Contract / Trade Secret Act / Tortious interference of business expectancy. You name it and your ex-employer will allege it.

So I would recommend a more calculated and purposeful course of action.

1. Find your contracts.
2. Call a lawyer to review your contracts.
3. Listen to the lawyer. If he or she says not to do X because you will get sued, they probably know what they are talking about.
4. PLAN and be smart.
5. If you get sued, be prepared to make the call. 1. Fight it? or 2. don't.

Let us know if we can help with your exit strategy / restrictive covenants in western, northern or southwest Virginia.

INJUNCTION --- OFTEN SOUGHT, NOT OFTEN GRANTED

2012-01-04T10:11:00.003-05:00

Injunction is a great word.

It is quite popular these days, for attorneys to draft language into an employment agreement that says something like the following:

EMPLOYEE agrees that should he or she leave the employ of COMPANY and violate any of the covenants outlined above (namely Non-competition / non-solicitation
provisions) that COMPANY will suffer irreparable harm, and that COMPANY should be entitled to seek and receive an injunction from a court of law.

Now, that language is essentially saying that you Employee, agree that your actions are bad, you are in breach and you agree to allow a judge to stop you.

Who would ever agree to such a thing? And is it binding?

I have seen many a commercial litigation attorney use this type of clause in a deposition. For Example:

Q: Employee, you read this Agreement before you signed it, didn't
you?

A: Yes, sort of.

Q: And you are smart person, right? You wouldn't sign something
you didn't understand, or agree with, would you?

A: Well, no.

Q: So, you agreed that if you were to go work for this
COMPETITOR, that COMPANY could sue you and get an injunction, right?

A: Well, ummm. I didn't know it meant that.

Etc.

I have not however, seen these provisions successfully used by a Judge as a reason to actually grant an injunction. The good news, is that a judge still has to do his or her job regardless of what you agreed to in a Contract. And in Virginia, that means he or she has to evaluate whether an injunction would be proper. And that is a detailed and truthfully, intense evaluation as to (a) whether or not the actions are likely to cause irreparable harm, that cannot be undone and (b) whether it is likely the COMPANY will succeed on the merits of their case later on.

So when someone threatens and injunction - take it seriously. When they file a motion for one, pay attention. But wait and see if they actually schedule a Hearing on the injunction. After all, if they really want your Money - an injunction won't help. If they really want you to stop working, and can prove you are in breach of your contractual obligations and causing them harm, than a Virginia judge just may grant an injunction.

WHAT THE WORLD WOULD LOOK LIKE WITHOUT NON-COMPETE AGREEMENTS

2012-01-03T08:50:00.002-05:00

I get it. You shouldn't be able to take some one's secret information and use it for the benefit for yourself. That is why we have the Uniform Trade Secret Act and states have adopted their own Trade Secret Acts.

I also get that stealing is wrong. Its a Commandment afterall, so it makes since that if you take information from a company that is not yours, they could file suit alleging conversion - making you pay, and return said item, bit of information, etc.

But is it really necessary to limit employees in the future, from engaging in their trade or profession? Is it necessary to take choice away from the customers?

If you are a business owner, your likely response is YES. IT IS NECESSARY.

But what if employees were so happy, and so loyal, they never wanted to leave?

Is it ethical, fair and or keeping in the spirit of a market economy, to fire someone and then say they are not allowed to work as they please?

What would the world, or Virginia rather, look like, if restrictive covenants were not permitted?

Would companies have to treat their employees better, pay them better and make sure both customers and employees were happy?

Would valued employees, the ones your customers loved, be promoted and paid what they were worth?

I think that people who are treated well, work hard and should get paid well. I don't think threats of lawsuits make for happy or productive employees.

Sadly, the world I am imagining is not the world we live in and employees are often asked to sign these agreements. Need help with yours? Call us today at 540-985-0098.

NEW YEAR - GREAT TIME FOR A LAWSUIT?

2011-12-27T09:31:00.002-05:00

Last night at a Christmas gathering I asked friends and family if they had a New Years resolution. The reply was the same. No resolution. Not yet.

Despite my group's non committal response, I believe many of us are making resolutions.

To take more time for family.

To learn to sew.

To lose weight.

To find a new job.

To start a new business.

To get sued...

I know the later is not really something anyone wants. Or plans for. But if you are deciding to make a switch - start a new - and you do not plan your move, you could end up in Court.

So please.

If you have a non-compete agreement or employment agreement of any kind, have it reviewed by an attorney who can explain your rights and restrictions. And then, you can make the move - the right move, understanding the risks.

Happy New Year all.

HOW I LEFT MICROSOFT

2011-12-19T11:31:00.004-05:00

On this blog, Lauren and I share our thoughts on the legal issues and available strategies when dealing with non-compete and non-solicitation contracts.

I just read an article from Business Insider titled, "How I Left Microsoft And Started A Competing Company Without Violating My Non-Compete." No one could write it better.

I strongly urge you to read this article if you have signed a non-compete agreement and have plans to go to a competitor or start your own business.

It might save you thousands of dollars in the long run.

ADVICE FOR THE VIRGINIA EMPLOYEE

2011-12-12T11:21:00.002-05:00

Pop Quiz time:

Which of the following is something you should NOT say if you want a woman to date you:

1. Hey, you look pretty. Like my grandma.
2. You sure yellow is a good color on you?
3. Hey, you look like a gal who can clean. Want to come to my house?
4. all of the above.

answer: 4.

Pop Quiz about leaving a company

WHICH of the following is something you should NOT do when you leave an employer:
1. Download your old customer list or email it to your self
2. Send a letter to your customers about your new venture / leaving
3. Post lots of info about your new job on facebook / linked in
4. Delete all emails you ever sent as an employee
5. Tell clients why you are leaving
6. All of the above

Answer: 6.

Please call an attorney before you make a move - especially if you have a non-compete or employment agreement. You will be glad you did.

PS - want a copy of our book? Still free this month - HOW TO BEAT YOUR VIRGINIA NON-COMPETE - call Mary Ann at 540-985-0098.

NON-COMPETES AND FOOTBALL COACHES

2011-12-05T09:59:00.003-05:00

Just ran across an interesting article I must share with our readers.

The article, Why Don't College Coaches Have Non-Competes in Their Contracts?, was published on the online version of Outkick the Coverage.

The writer seems to blame the ever increasing salaries of the football coaching elite to the absence of non-compete clauses in their employment contracts.

My Take: That is a bunch of BALONEY! Read the article for yourself.

TOP 10 REASONS TO HAVE A LAWYER REVIEW YOUR SEVERANCE AGREEMENT

2011-12-02T09:31:00.004-05:00

This is the title of an article published in Forbes magazine today. It is a must read for executives, and others, leaving their current employment and who are presented with a severance agreement.

Guess what item made the Top 10 list? That's right! A non-compete or non-solicitation provision. The article said the following about the topic:

Many employees are bound by non-compete and non-solicit agreements created in employment contracts or other documents they have signed. These agreements prohibit the employee from competing with the employer in certain areas for a specific amount of time, and from hiring other workers away from the employer. Where these restrictions already exist, a lawyer should ensure that the severance agreement does not expand them. Where the employee has not already entered agreements on these topics, the attorney can work to limit the time and scope of restrictions the separation agreement imposes.

My Take: Make sure you know the long-term ramifications of signing that severance agreement. It may provide you with a few thousand dollars today but what effect will it have on your employment options for the future?

OMG.. LOL... DID YOU REALLY POST THAT?

2011-11-28T15:17:00.005-05:00

Tis the Season.

No, not for Christmas and do gooding or Holiday cheer.

Tis the Season for Holiday Office Parties... which means, booze, loose lips, camera phones, and evidence.

What? Evidence?

Yup. Evidence.

Evidence in business tort cases.

Like when you tell Cindy the receptionist, while sipping some pink cocktail through a straw "Thsindy... don't tell anyboody, ok? but this is my lasst Chrimas party here... Because me and Bill, yeah, Bad breath bill are starting our own company. No really. Its a secrect. don't tell, thsindy, will ya?"

Or

When your sister is at the mall with your wife and they run into one of your colleagues, and your sister says "Hey, so nice to meet you. So you work with my brother's old company, or his new one?" Sister, apparently, didn't get the memo that you had not yet given notice and were not leaving until January.

or

When you are updating your Facebook on January 1 to share with everyone the news that you have joined the XYZ corp. (your old employer's biggest competitor) starting the next week, and your boss was told you were going to retire from the industry and start a hot dog stand.

So please. Don't let this be the Season you get sued. I promise you, a little thought goes a long way in non-compete cases.

RUMOR MILL IS WRONG AGAIN

2011-11-16T11:37:00.004-05:00

I was attending a dinner party on Saturday (a super fun one by the way) when a friend asked me about my work.

He works for a locally owned company and said something to the effect of:

"We have everyone sign a non-compete but I have always wondered why since they aren't really binding."

Yummy shrimp treat in hand, I asked "@$RT^@$IR @#$(^#$(R* #RT^#$(R&@$R IF $#R(@$&R."

After realizing I had food in my mouth, I smiled, waited a moment, cleared my throat and asked again "Why do you think they are not binding?"

"Because everyone knows they are not," he replied.

So - I had to educate this very smart, capable and bright friend and once again dispel the incorrect rumors floating around about non-compete agreements in Virginia.

Once again, just in time for the Holidays, allow me to make the following statements of fact:

1. Non compete agreements may be "disfavored" under the law, but they are often upheld.

2. Regardless of whether you signed a contract, you owe certain duties to your employer as an employee, and when you leave.

3. Even if your ex-employer cannot prove damages, he or she may sue you. In court. For lots of money.

4. Non-compete litigation is not fun. Do you like getting your teeth cleaned? Me neither. Multiple by 100 and then pay your dentist $20,000 for the job. That is what non-compete litigation can feel like. Necessary, irritating, uncomfortable, compromising and expensive.

So. Happy Thanksgiving. Don't listen to the rumor mill, listen to your old pal Lauren instead.

TALK SHOW HOST GETS A SURPRISE!

2011-11-14T10:12:00.002-05:00

I just had to share this news report with our readers.

Ted Arneault was hosting a show live on KDKA-AM (1020) when he was served papers alleging that he was in violation of the non-compete clause of his contract with a former employer. MTR Gaming Group, based in West Virginia, claims that Arneault violated his non-compete when he became a shareholder of American Harness Tracks.

Mr. Arneault should have spoken with lawyers BEFORE going on the air and "thumbing his nose" at the non-compete agreement he signed with his previous employer.

My Take: Know the legal consequences of your actions before you make employment decisions which could be embarrassing and costly.

HUGE WIN FOR VIRGINIA EMPLOYEES!

2011-11-04T11:21:00.003-04:00

Today (November 4, 2011), the Virginia Supreme Court handed down a decision which is a huge victory for the little guys...the employees in Virginia.

In Home Paramount Pest Control v. Justin Shaffer, the court held that an ex-employee was not bound by the terms of his non-compete he signed with his employer. Home Paramount Pest Control’s noncompete provided that, for two years, a former employee could not engage “directly or indirectly” in “any manner whatsoever” in conducting broadly identified activities of a pest control business.

Home Paramount’s noncompete provision would have prevented former employee, Justin Shaffer, from working in the pest control industry in any capacity. The provision’s language was so broad it would have restricted Shaffer from even being “a passive stockholder of a publicly traded international conglomerate with a pest control subsidiary.

Interestingly, the same Virginia Supreme Court upheld the identical language of Home Paramount’s noncompete over 20 years ago in Paramount Termite Control v. Rector.

My Take: Virginia employees will no longer be held hostage to outrageously broad noncompete agreements which do not take into consideration the actual function performed by the former employee at his/her old job and at their new job.

WHY VIRGINIA COMPANIES MAKE YOU SIGN NON-COMPETES AND NON-SOLICITATIONS

2011-11-02T11:10:00.005-04:00

Want to know why your company has non-compete agreement?

I think we can learn alot from reading what corporate lawyers have to say to their clients - and here is what they have to say:

"If your goal is to protect your assets, ie, your costumer base you should strongly consider a properly drafted covenant not to solicit customers or a client and a covenant not to solicit employees."

So that is why Virginia employees have these things. They are being told they NEED THEM to protect their ASSETS.

eek.

NON-COMPETES IN TECHNOLOGY JOBS

2011-11-02T09:55:00.000-04:00

I am currently reading a fascinating study on the use on non-competition agreements in technology jobs. I wrote about the study last week and the author (Dr. Matt Marx of MIT) was kind enough to share a complete copy of the study. Sadly, because of copyright laws, I am not allowed to re-post it.

Notwithstanding, I wanted to share my appreciation for his work.

For years I have watched non-compete contracts derail careers, harm individuals personally and professionally, and cause families pain and financial suffering. This is not an exaggeration. Although the law states these agreements are not favorable, and will be reviewed strictly by the courts, the practical effects of having a non-compete agreement, and changing jobs, goes far beyond the Court house steps.

Dr. Marx writes in his article, that "one mechanism by which firms assert power over highly skilled workers is a post-employment non compete agreement." He argues that while it may be impossible to separate workers from their skills, "by exercising post-employment restraints on ex-employees, it may none the less be possible to separate works from the use of their skills. NON-COMPETE AGREEMENTS ENABLE COMPANIES TO CONVERT GENERAL TRAINING INTO FIRM SPECIFIC HUMAN CAPITAL BY DENYING WORKERS THE OPPORTUNITY TO APPLY THOSE SKILLS OUTSIDE THE FIRM." The Firm Strikes Back: Non-compete Agreements and the Mobility of Technical Professionals, American Sociological Review, 76(5) 695-712, Dr. Matthew Marx, 2011.

He also found in his research, the methods used by employers to have the contracts signed by employees were calculated: "Firms carefully manage the process of obtaining signatures for non-competes, usually not mentioning the non-compete until after the worker has accepted the job offer (and presumably has turned down other job offers)." Id.

This ambush approach, either on day 1 of employment, on a Friday at 9am with an email from HR that says "sign and return by 5pm" and or attached to a severance agreement that expires quickly, is typical.
And the effect?

Hundreds of employees who feel bullied, helpless and without control over their own jobs. Is that really how you want to build a company?

Thank you again Dr. Marx for your work. I am excited to see this very real issue being addressed outside of the practice of law.

VIRGINIA LAW ON NON-COMPETES MAY BE CHANGING - SOMEWHAT

2011-10-31T11:10:00.000-04:00

A friend of mine is one of the top appellate lawyers in the Commonwealth of Virginia. Yes, I am name dropping, but he really is good.

As an appellate lawyer, he takes the decisions from local courts and asks the Supreme Court of Virginia to affirm or change the lower court rulings. It is essentially like asking your Mom for permission to do something, and when she says no, you go ask your Dad hoping his decision will be more favorable and final.

On Tuesday of this week, he and his colleagues at Gentry Locke Rakes & Moore, will travel to Richmond Virginia on a Non-Compete case, BB&T Insurance Services, Inc. v. Thomas Rutherfoord, Inc., et al. (which was originally decided by the City of Richmond Circuit Court) and essentially ask the Supreme Court of Virginia to uphold the Circuit Court's ruling.

I support my friend and since I represent employees in non-compete cases, I heartily support his argument in this case.

As the Circuit Court ruling summarizes,

"This action arises from Moore and Donna Perkinson's decision to voluntarily terminate their employment relationships with BB&T, and their subsequent decision to accept employment with Thomas Rutherfoord, Inc. ("Rutherfoord"), a BB&T competitor. Plaintiff alleges Breach of Fiduciary Duties ("Count I"), Breach of Contract ("Count II"), Tortious Interference with Contract ("Count III"), Tortious Interference with Business Expectancy ("Count IV"), Common Law Conspiracy ("Count V"), Business Conspiracy in [**2] violation of Virginia Code § 18.2-499 ("Count VI"), and Misappropriation of Trade Secrets in violation of the Virginia Uniform Trade Secrets Act ("Count VII" or "VUTSA"). Defendant Moore demurs to Counts I, II, IV, V, VI and VII of the Complaint Defendant Perkinson demure to Counts I through VII of the Complaint. Defendant Rutherfoord demurs to Counts III though VII of the Complaint. All Defendants contend that the Agreement is invalid as a matter of Virginia law."

Did you get that?
Employees leave, join a competior and get sued - a 7 count complaint which means, a complicated lawsuit is filed alleging they did all sorts of bad and not legal things - like take trade secrets, and business, etc.

The Defendants / Employees, once sued, filed a Demurrer, which basically says - "Hold up Judge. Even if all the nasty stuff they said in their lawsuit is true, as a Matter of Virginia law, the case cannot continue because..."

The Judge agreed with the Defendant Employees - finding (and while my summary is long, it is very short compared to the very detailed Court opinion):

"Court finds that these actions as pled do not sufficiently state a cause of action for a breach of fiduciary duties. For these reasons, Defendants' demurrers to Count I axe sustained."

and

"Because the prohibition is not limited to employment that would be in competition with BB&T, it is not narrowly drawn to protect the employer's legitimate business interest. It is unduly burdensome on Moore's ability to earn, a living and is offensive to the public policy of the Commonwealth. Therefore, the non-competition restrictions are overbroad an unenforceable."

and

"There is an issue with the duration of the confidentiality clause. The employee is restricted "…[dj]uring the term of the Employee's employment with BB&T Insurance and for perpetuity after Employee's separation of employment with BB&T Insurance." See Id. (emphasis added). Similar to the example stated in Lasership, the perpetuity restriction prohibits Moore for "the rest of his life." This causes the clause to be overly broad and not narrowly tailored to protect the legitimate business interest of BB&T. As such, the confidentiality restriction is unenforceable as a matter of law."

and

Given the Court's finding concerning the non-competition provisions, the confidentiality provision, and the unequivocal presence of the "blue-pencil" provision, the Court finds that the Agreement between Moore and BB&T is invalid in its entirety. In the absence of a legally enforceable contract between Moore and BB&T, Plaintiff's claim for a breach of contract ("Count II") and tortious interference with contract ("Count III") sue not sufficient to survive demurrer and are dismissed.

and

As to element four, BB&T has failed to sufficiently plead interference by use of improper methods on the part of the Defendants. BB&T claims that Defendants used improper methods "included, but not limited to, Moore's breach of the Employment Agreement; Moore and Perkinson's breach of fiduciary duties; Rutherfoord and Perk in son's tortious interference with the Employment Agreement; Defendants' unlawful conspiracy to injure BB&T Insurance in its trade or business, and Defendants' violation of the Virginia Uniform Trade Secrets Act" (Comp P 81).

and

For the reasons stated in part II B of this opinion, the Agreement is invalid and unenforceable as a matter of law, and therefore breach of said contract cannot satisfy the improper means requirement of a tortious interference with business expectancy claim.

and

For the reasons stated in part II A of this opinion, Plaintiff did not sufficiently state a cause of action for a breach of fiduciary duties with regards to Moore and Perkinson. Therefore, this claim cannot satisfy the improper means requirement of a tortious interference with business expectancy claim.

and

BB&T has failed to state facts sufficient to support a claim of common law conspiracy. Therefore, Defendants' demurrer as to Count V is sustained.

and

For the reasons stated in part II A of this opinion, Plaintiff did not sufficiently state a cause of action for a breach of fiduciary duties with regards to Moore and Perkinson. Defendant Rutherfoord had no such duties, and Plaintiff has failed to plead facts sufficient to allege that Rutherfoord induced a breach of such duties. Plaintiff has failed to sufficiently plead the element of improper means, and therefore has failed to sufficiently state a claim for violations of the VUTSA. Defendants' demurrer as to Count VII is sustained.

CONCLUSION: "After considering the record, argument of counsel and the legal memoranda filed by the parties, the Court SUSTAINS Defendants' demurrers to all seven Counts of Plaintiff's claim and DISMISSES Counts IT and III."

TRANSLATION: EMPLOYEES WIN. LAWSUIT IS DISMISSED.

There are a few lessons to be learned from this appeal even before the arguments are heard and the case decided.

1. Appeals take a long time.
This case was argued in December of 2009, and the Court ruled last February. The parties have wait almost 1 year for final resolution of the case. And trust me, no one wanted to pay attorneys for an extra year.

2. When you go to Court, things are never guaranteed until they are decided by the Supreme Ct.
I am sure the employees were thrilled last February. Now they have had 9-10 months to sweat this appeal and live and work in limbo not knowing what the court will do.

3. The law is always changing.
Anything the Supreme Court of Virginia is asked to review a case or an issue, there is the potential that our law will change and how we as attorneys and you as employees approach your employment contracts may need to change as well.

So, I will be in touch and provide updates on the case. Good Luck JAY - many Virginia employees and I will be thinking of you this week.

NON COMPETES ARE BAD FOR BUSINESS - I AGREE

2011-10-28T11:13:00.003-04:00

Start by reading this article about the Impact of Non-Compete Agreements on Employees.

I know you signed one a few years ago.
I know this because you:

1. Live in Virginia
2. Work as a consultant
3. Somehow are tied to the Feds

So I know you signed a non-compete. And I bet that when you signed it, you thought it wasn't really binding and so you didn't worry.

Am I right?

Well, sadly, you were wrong. They are often binding under Virginia law. Often. And they can have a negative affect on you personally, and professionally.

According to Professor Matthew Marx (who wrote the above article and conducted a most relevant study on Non-compete agreements in technology fields) of MIT:

"For workers bound by non-compete agreements, the consequences are serious, according to my research, for which I surveyed 1,029 engineers, who were initially randomly selected from a variety of high-tech fields. I also conducted separate in-depth interviews with 52 people who have worked on voice-recognition technology, a field in which I once worked. The overall finding is that nearly one-third of tech workers who sign non-compete agreements end up in entirely different industries when they take their subsequent jobs. And in many cases, these workers stopped applying specific skills they had developed — often after obtaining a PhD — and took pay cuts. In short, these people take a career detour, they sometimes earn less money, they lose touch with their colleagues, and their skills atrophy."

Yup. Agreed Professor Marx.

Thank you for taking the time to look into this issue.

So my advice remains the same.
They are valid. They are not good. Don't sign one. If you did sign one get advice before you make a leap.

VIRGINIA NON-SOLICITATION AGREEMENT

2011-10-26T12:22:00.000-04:00

It is Fall.
The leaves are red, orange yellow - crisp. The air is clean and the sky bright blue.
It is my favorite season.

So lets talk about something else that is my favorite. (Note - for those who liked the movie Elf, Smiling was his favorite). NON -SOLICITATION AGREEMENTS are my favorite.

There are typically two kinds:

a. A provision wherein employee agrees not to solicit other employees to leave the company, or go work at a competitor. EMPLOYEE NON-SOLICITATION.

b. A provision wherein employee agrees not to solicit customers, clients, etc., and offer same or similar services. Really, it is a NON-COMPETITION AGREEMENT named a NON-SOLICITATION AGREEMENT.

Lets focus on option (a) - EMPLOYEE NON-SOLICITATION.

I like these because I don't think they matter much in the great scheme of business tort litigation, unless or until you the employee acts like a bone-head.

Example: Government contractor for DOD says to one of his colleagues, "I have always wanted to open a florist. It is my dream. If only I knew someone with experience in floral design." Co-worker, bright-eyed, puts down his hot dog and says "I have a masters degree in floral design and my passion is orchids. I would Love to open a florist with you." Then these lovely government contractors proceed to give their two weeks notice, rent space in Georgetown and open FEDERAL FLORISTS.

Could this be a breach of their non-solicitation agreement?

YES. CLEARLY.

Does the government contractor employer care? NO. NOT AT ALL. They aren't harmed, won't suffer damages and won't lose a single client, project bid etc. because of your solicitations.

Will they sue these fine creative young men for breaching their agreements? NOPE. I REALLY DOUBT IT.

So why are these agreements my favorite? Because unless you are a bone - head (explanation to follow) they really don't hold much water and will not likely lead to Court because employers will have a hard time proving damages, etc.

BUT if you are a Bone-Head, and do something like the following, your non-solicitation will matter:

Example: Three young governmental contractors sitting at a fake Irish bar in Arlington, after work one day, drinking foamy Guinness sitting on bar stools say "Hey, we bill our client DOD $150 an hour for our time. And we only see about $35 of that. Our benefits aren't great. We do all the work and Jerry jerk who runs the office won't likely give us the bonus we are due this winter. Lets go start our own competing company, bid the next job to DOD, keep all the money and only charge $148 an hour - ALL PROFIT." glasses are raised and cheers uttered.

Could this be a breach of their non-solicitation agreement?

YES. CLEARLY.

Does the government contractor employer care? YUP. SURE DOES.

This conversation and the subsequent formation of FRAT GUYS CONSULTING, Inc. likely leads to a 4 part lawsuit alleging (a) breach of fiduciary duty; breach of non-compete; breach of non solicitation and violation of Virginia Trade Secret Act.

Will they sue these fine creative young men for breaching their agreements? Yup. Faster than these guys update their Linked In profiles.

So. Non-solicitations are my favorite still because if you are good - they won't harm you. If you are a bone-head, they really can. So don't be a bone head under Virginia law. Or, do, and call my office when you need help.

HOW A NON-COMPETE CASE PLAYS OUT IN COURT

2011-10-12T11:18:00.000-04:00

I just finished explaining to a caller, that some non-compete cases focus on the law, and some on the facts.

What do I mean by this and why should you care?

Under Virginia law, non-compete agreements are decided on a case by case basis.

When the law defines a case:
An employee, once sued, could ask the court to decide "as a matter of law, the non-compete at issue is overbroad, unreasonable and therefore unenforcebale." This is typically done toward the beginning of the case and is called a Demurrer. I am sure that word means something in Latin, but I must admit I don't know what.

If the court feels it can decide whether the contract is valid, without any additional evidence - it can rule on Demurrer that a contract is unreasonable.

Some courts and judges do this with frequency. I am finding however, that judges are increasingly hesitant to kick a case out of the court (or a count in the case like Breach of Contract), before evidence is taken on Demurrer. So while it is common place in my practice (when a contract arguably is overbroad) to file a Demurrer or Motion to Dismiss under Federal Law, it is not common place for courts to be decisive at this early stage.

For example, this week in Loudoun County, Judge Horne, when asked to rule on Demurrer as to whether a non-compete was reasonable, the court in Mileston Construction Servs. Inc. v. Lynch, held that additional facts may be necessary to determine whether the clause / contract at issue was enforceable.

So while legally speaking, the court had the right to toss the contract as a matter of law, but it declined, saying "it may come down to the facts" or " I can't rule without additional information."

When the facts define a case:
Therefore, when the facts define a case, wow, you better save your money because litigation is going to take awhile and be pricey.

When facts define a case, you have to spend time in discovery developing the facts and telling a judge why the facts matter and why the facts and the law should be decided in your favor.

Bottom Line:
Employees even with good FACTS don't want to litigate based on the facts. Because it gets costly and takes forever. And you have to pay an attorney to argue your good facts.

KEEPING YOUR LEGAL ADVICE CONFIDENTIAL

2011-10-06T08:49:00.004-04:00

Lauren and I have advised hundreds of non-compete and non-solicitation clients over the last few years. We evaluate their current job situation, provide insight into the enforceability of their non-compete or non-solicitation contracts, and discuss specific exit strategies.

We have an attorney-client relationship with those individuals and what is discussed is confidential and protected from later discovery...should litigation follow. I should say, almost always confidential and protected.

Clients need to understand, whether you are speaking with us or other lawyers, that attorney-client discussions and evaluations are only confidential if the discussion is only between the client and his/her attorney.

For example, a client retains our firm to evaluate the enforceability of their non-compete. We discuss the situation with the client and make recommendations and provide legal advice on an exit strategy. Two days later we get a phone call from a spouse or parent of the client who wants to take issue with our recommendation or to further discuss additional factors they believe are important in our evaluation. We politely tell those concerned family members to share those concerns with the client and allow the client to discuss the issues directly with us. You might be surprised how often this offends many concerned family members. It should not. We are only trying to protect the client from possibly having to divulge in a subsequent deposition or trial the issues discussed with counsel.

My Take: Don't be offended if your friends' or family members' legal counsel refuses to speak directly with you...they are only trying to protect the confidentiality of the process.

DUTY TO YOUR VIRGINIA EMPLOYER

2011-10-03T11:46:00.001-04:00

I love a good analogy.

If you got married, but didn't say any vows out-loud during the ceremony, do you think you could cheat, lie, steal money and not honor your spouse without consequence?

Of course not.

Everyone knows that marriage comes with certain duties - whether you spell them out during the ceremony or not, you are supposed to honor, cherish, not cheat, be nice, etc..

Employment relationships are the same way. Whether you say certain things in an agreement or not, you owe your employer certain duties.

You won't cheat (or compete while an employee - FIDUCIARY DUTY)
You will honor (You won't take their business away or say bad things - TORTIOUS INTERFERENCE OF CONTRACT / DEFAMATION)
You won't steal (TRADE SECRET ACT / CONVERSION)

Even if you didn't sign a contract with your employer, there are certain things you cannot, should not do under Virginia law. What are they? Above is a quick list. For specific information however, you may need to contact an attorney.

So before you go discussing your next job or starting a business --- be aware. You owe certain duties to your employer not spelled out in your vows. I mean, contract.

FINALLY A POLITICIAN THAT FEELS YOUR PAIN

2011-09-28T16:34:00.004-04:00

Good news Virginians. Someone who is running for office, has been in your shoes.

What shoes?

The employee "got sued by my ex-employer and had to pay attorneys fees" shoes.

http://www.washingtontimes.com/news/2011/sep/25/virginia-senate-candidate-draws-heat-for-small-bus/

Some think it is a negative that the candidate was involved in litigation and that it was alleged he breached his contract. I am not one of those people.

I think it is finally good news that someone in Richmond / Washington has been through this often terrible and unnecessary process of employment litigation. Maybe he can tell his colleagues about the ordeal, about the waste, the stress etc.. and maybe Virginia can stop being a state that favors employers in these matters.

Just a thought.

WHAT YOUR ACTIONS MEAN, LEGALLY SPEAKING IN EMPLOYMENT CASES

2011-09-26T09:03:00.004-04:00

Ugh. I hate to do this, but I think it is time to share with you, the good employees of Virginia, the following secrets about lawsuits and litigation.

In real life, when something happens in the employment context, it often is dismissed as part of doing business.

In Court (which is NOT REAL LIFE) when something happens, big fancy words and terms are given to the act, allegations are made, and small actions become very big actions tied to damages, attorneys fees and sanctions.

I know, you have no idea what I am saying. Here are a few examples.

REAL LIFE
1. YOU ARE AN UNHAPPY EMPLOYEE. You are also very hard working and have spent years working on relationships with your customers and clients, who love you. Customer Fred says to you one day, "Hey Sal, ever think of opening your own shop?" You love Fred, have known him for years and so you honestly respond "Fred, I think of it every day. But I have this non-compete and I would hate to breach it and take all of Frank's customers. He would be so angry if I did that"

LITIGATION

     1. BREACH OF FIDUCIARY DUTY
     2. TORTIOUS INTERFERENCE OF CONTRACT
     3. TORTIOUS INTERFERENCE OF BUSINESS EXPECTANCY
     4. DEFAMATION

Employee, while owing a duty to FRANK, INC., did knowingly and intentionally, defame FRANK, try to take his business, took affirmative steps to breach his contract, and caused Frank millions of dollars in damages. Furthermore, while an employee, owing a fiduciary duty of loyalty, he did take affirmative steps to compete with and take the customers of FRANK, blah blah blah blah blah.

REAL LIFE
2. YOU ARE AT OFFICE CHRISTMAS PARTY and Sally, the receptionist with a love of gossip, asks you what your plans are for the New Year. You, having had a few too many glasses of pink punch, explain this might be the year you and Ralph in accounting go open your own business. Few months later, you leave, and Ralph quits. Coincidence? Sally doesn't think so and so she shares the Christmas conversation with Owner.

LITIGATION
     1. BREACH OF FIDUCIARY DUTY
     2. BREACH OF NON-SOLICITATION
     3. TRADE SECRET VIOLATION (they love this one when two employees go anywhere together)
     4. CONVERSION (Someone thinks they see you take a box of invoices out the door when you leave)

The defendants, Larry and Ralph, did knowing and intentionally take the trade secret information of the plaintiff, with the intent to use such information for their own economic gain. in addition, they breached their employment agreements herein attached as Exhibit 1, by....

Here is the moral of the story.

KEEP YOUR MOUTH SHUT.
Don't email. Don't share.
Don't chat. Don't write your future plans online.
When someone wants to sue you, or make an example out of an employee - these small, harmless tid bits of information become huge big deals that will keep you in litigation for MONTHS longer than you want.

I would value the above incidents, to $10,000 EACH in attorneys fees for defending your case. No really. $10,000.

So please, be careful. In Litigation speak, and in lawyer land, the above are just enough to file suit and keep you in Court when you really don't want to be there.

VIRGINIA EMPLOYMENT LAW

2011-09-22T11:15:00.002-04:00

I love buzz words and misunderstood phrases. They keep attorneys like me, in business.\

For example: "Right to Work State."

You know what that means, don't you?
RIGHT TO WORK STATE MEANS:
a. You can't be fired without cause.
b. You can't be forced to sign a non-compete.
c. Both a & b.
d. You can't be forced to join a union.

HMM. If you guessed a, b or c - you need to read this. Now. Please. Stop reading and go to this link right away.

Many client inquiries begin with questions:

"Can they fire me for..?"
"Is the contract really binding if...?"
"If I have my wife own the competing business, can I?"

long and short of Virginia Employment law, is this:

1. You can mostly be fired for any reason but for Race, Gender, Age or Religion.

2. Your non-compete agreement will stand on its own - which means it must be reviewed before anyone, attorney, etc. can give you an opinion as to whether it is valid under Virginia law.

3. Rumors about employment law, are rarely true.

4. Most of Virginia employment law is defined by court cases - not hard and fast code sections... so it means it is evolving.

Want to learn facts from fiction? Want your Non-compete or employment contract reviewed today? Call our office.

CONSIDERATION in VIRGINIA NON-COMPETE AGREEMENTS

2011-09-20T09:51:00.004-04:00

What is consideration?

It is not when your husband opens the car door for you. That is being considerate.

It is not when you think about a decision before you make it. That is considering your options.

Consideration in any Virginia Contract, is the mutual promise of performance.
I will agree to do X, in exchange for which, you will agree to do Y.
Often times in contracts you will see language like "for good and valuable consideration receipt of which is hereby acknowledged."

Example:
I will give you $100,000 and you will give me the deed to your house.
I will agree to work for you for 1 year, and you agree to pay me $5,000 a month.
I will agree to cook your meals, in exchange for which you will give me a place to live.

Mutual promises.
Bargain of exchange.
Everyone gives / everyone gets.

But what if you have been working somewhere for 5 years and one day you are asked to sign a non-compete agreement? Clearly, you are being asked to give something up... what is the owner / business / employer giving to you in exchange?

In many states, additional consideration is required for this type of employment agreement to be deemed valid and reasonable. The employee would have to get a bonus, cash, extra vacation - SOMETHING they didn't have before in order to balance what they are giving up.

Virginia however, is not one of those states. The Law in Virginia currently does not require employers to give you something extra. The courts feel that getting to keep your job is sufficient consideration.

So while I think it is the RIGHT thing for an employer to give something extra when asking a long term employee to sign a non-competition or non-solicitation, and while Virginia law may very well change on this point, the state of the Commonwealth today does not mandate additional consideration.

So while it would be considerate of an employer to give you a bonus when you sign a non-compete, and you may want time to consider your options, Virginia law does not require additional consideration to make the agreement valid. Apparently, keeping your job is consideration enough.

VIRGINIANS WITH NON-COMPETE and/or NON-SOLICITATION AGREEMENTS

2011-09-13T11:14:00.003-04:00

What a year it has been. And we are seeing more and more non-competition and non-solicitation agreements popping up in the most unusual places.

Like in day care. Or in tattoo parlors and in hospital rooms.

Here are just a few, a sampling really, of the industries we have seen these contracts in this year:

RETAIL - mattress companies / clothing retail / automotive

SERVICE - hair / salon / tattoo artists / massage therapists / investment bankers / brokers / insurance sales / commodity traders

LAW - court reporters / legal vendors - tech companies

HEALTH CARE - doctors / nurses / home health / physical therapists / speech / Dentists / Veterinarians

MANUFACTURING - engineering / factory floor / marketing

CONTRACTING - government contractors of all shapes and sizes /

Basically. They are everywhere but for one place. You will never find an attorney who has a non-compete agreement. Wonder why? We say it is against public policy - that clients should have choice. But the real reason in my humble opinion, is because attorneys want freedom, just like you. To serve their clients, customers, do their job without being hindered or thwarted by an agreement that stifles fair competition.

So really, chances are you will see one of these some day. Let me know if you need help understanding what it means.

NEWSLETTER ON VIRGINIA NON-COMPETE LAW

2011-09-09T10:28:00.003-04:00

We have published a newsletter on Virginia Non-Compete law for a number of years.

To read our Fall 2011 update in this area, all you have to do is click right here.
To subscribe to our Non-Compete Newsletter, all you have to do is click right here.
To learn more about Virginia law on non-competes, all you have to do is...

You get the point.

VIRGINIA AND NON-COMPETE CONTRACTS

2011-09-05T09:53:00.005-04:00

The citizens and businesses in Virginia are eagerly awaiting rulings by the Virginia Supreme Court on the enforceability of non-compete provisions in employment agreements. Presently, these types of restrictions are legal and enforceable in Virginia...in limited circumstances.

As reported in the Washington Post, the Court is preparing to hear two cases that could affect virtually every business in the state that wants to hire employees away from industry competitors, and every worker mulling a move to a competing employer.

The cases, both arising from disputes between local employees and businesses, raise questions about whether courts can enforce non-compete agreements, provisions in employment contracts that often prohibit workers from soliciting customers from a former employer once they have jumped ship to a competitor.

My Take: I am hopeful the two cases, Home Paramount Pest Control Cos. Inc. v. Justin Shaffer, et al. and BB&T Insurance Services v. Thomas Rutherfoord Inc., will do away with the viability of non-compete and non-solicitation agreements. In my opinion, these types of restrictions greatly harm our economy and inhibit innovation.

We will share (and discuss) the Virginia Supreme Court's decisions when they become available.

DAMAGES in NON-COMPETE CASES

2011-08-30T11:48:00.005-04:00

Let us discuss the following:

If you are driving, the car in front of you slams on its brakes, and you have to slam on yours to avoid hitting them... You do avoid hitting them, do you think they can sue you for "almost causing property damage?

The answer is: SURE they can sue you, but it won't get very far. In fact, I am confident a Virginia judge would throw that case right out the window..

BECAUSE under Virginia law, the following must exist in a negligence action:
1. DUTY
2. BREACH
3. CAUSATION
4. DAMAGES

Non-Compete cases operate the same in theory, but not the same in practice.

To claim an employee breached his non-compete, an employer has to prove:
1. CONTRACT
2. BREACH
3. DAMAGES

The difference is, in non-compete or business tort litigation, the employer has months to dig into your business before he has to prove actual damages..

So what I am seeing, too often for my taste, are employers who file suit alleging non-compete breach, and I know in my heart of hearts they can't prove damages.

"So," clients often ask me, "isn't that unethical to file a case when you can't prove damages."

My answer is "well, it is unethical if you know you can't prove damages.. but most folks think if they dig and dig, they will find something."

Also, the reason they file suit is really to threaten and scare you into submission hoping you will quit what you are doing, or pay them money to go away rather than take the case to a jury.

So. Think about the almost car accident case. Shouldn't that apply to business torts?

I think so - but the law and the practical application of it in our current legal climate allows these cases to continue for months before the damages issue becomes dispostive.

WHAT IF YOUR CONTRACT CHANGES.. AGAIN

2011-08-26T11:18:00.003-04:00

Recently, I have seen more than one individual who over the course of their employment, has been asked to sign not one, not two but three or more agreements containing non-compete language.

Upon review I discovered the following:

Year 1996 - Contract A was signed - Employment Agreement. California Choice of law. 2 year non-compete prohibition to contact clients. No bonus attached to document.

Year 2001 - Contract B was signed - Non-Compete Agreement. New York choice of law. 1 year non-compete and prohibition from contacting clients, prospective clients, and other employees. Attached to bonus and does not in any way refer to original employment contract.

Year 2009 - Contract C was signed - Confidentiality Agreement. Virginia choice of law. 18 month non-compete, confidentiality agreement that considers customer identity as trade secret. No bonus. No reference to prior contracts - mostly disguised as a trade secret or confidentiality agreement.

"So lawyer," client inquires. "Which of my agreements is binding? Which must I follow? And what can I do?"

All good questions. And my answer: "Let me see the contracts. I am not licensed in CA or NY and cannot give you an opinion as to the validity of those agreements at the time you signed them, but, I bet I can review the most recent one and explain in more detail whether the old ones are now void, etc."

Which is what we can do... but here MY CONCERN:
WHY WOULD A COMPANY ASK AN EMPLOYEE TO SIGN 3 AGREEMENTS, UNDER 3 DIFFERENT STATE LAWS, WITH UNIQUE TERMS THAT MAY OR MAT NOT CONTRADICT EARLIER CONTRACTS?

ANSWER: No one knows... maybe, different law firms were hired, forms used and no one saw the problem created by being inconsistent. Either way, it happens. And an employee is not wrong in being confused.

If it happens again, and contract D is presented... maybe ask a few questions and perhaps the company will realize the mess they have created.

NON-COMPETE AGREEMENTS FOR FINANCIAL ADVISORS and THE BROKER PROTOCOL

2011-08-22T13:10:00.003-04:00

I came across a great website today. It is run by the Ohio law firm of Carlile, Patchen & Murphy. The firm (as stated on their website) "has 25 years experience representing the securities industry and its employees in disputes involving employment agreements, restrictive covenants, unfair competition and trade secrets."

Yes. They are on the other side of the coin so to speak as our firm that represents employees almost exclusively, but they have created a tremendous resource in establishing a website about the Broker Protocol.

The Broker Protocol (which we have written about many times before here, and here and here) is a gentleman's agreement in financial services wherein companies agree that their agents and employees may move from company to company, taking certain information with them, so long as (1) it is limited information allowed in the protocol and (2) both companies (new and old) are signatories of the protocol.

The reason this site is so great, is that it provides an updated list of those companies that have signed the Broker Protocol. Why is this list so fab? Because many clients need to know whether they can make a move before they actually quit their jobs - and whether they can make a move may depend in part, on the Broker Protocol.

So I am writing today simply to applaud the fine people of CP&M and thank them for their super useful and well done site on the broker protocol.

I know you will find on your statcounter, that some attorney from Roanoke Virginia is frequently going to visit the site.

HOW TO QUIT YOUR JOB IN VIRGINIA

2011-08-16T15:41:00.002-04:00

Oh wow.

I could write volumes on this subject.

I could give you obvious advice about how you should be aware of the contracts you have signed and duties you owe to your employer. And I would like to advise you to leave on good terms. Know that IT may read all of your emails and see if you took any sensitive documents before you left. And then I would tell you to be careful before planning a new business, or joining the competition.

Because YES you can be sued without a non-compete. You can be sued without any written agreement. Your new boss CAN fire you when suit is filed. And you may be stuck in Court, with no job, and attorneys fees..

So please - before you Quit your Job in Virginia, call an attorney and determine whether your plans, actions, etc., are legal, or whether or not your seemingly harmless plans will lead you to the Court house steps.

CHOICE OF LAW

2011-08-12T09:40:00.002-04:00

Twice this week I have let potential non-compete clients through the door and then had to tell them, "I am so sorry. I have to close your file. Your contract is bound by the law of a state where I am not licensed and I cannot ethically give you an opinion as to its legality."

Ugh.

What?

"But I live in Virginia," non-compete client will say.

"Yes, I understand that. But you signed a contract saying you would be bound by the law of Maryland, Illinois, California, whatever and I am not licensed there... so I cannot really tell you about the law of that state."

"Well who do I call?"

Sadly --- I don't know that either.

Please check the end of your contract --- where it says CHOICE OF LAW, and if it says Virginia - call us! We can help.

EXHIBIT 1

2011-08-05T14:22:00.002-04:00

I have seen the following documents, print offs, screen grabs etc. used as "evidence," attached to non-compete lawsuits, to reflect breach of contract, etc.

- LINKED IN PAGES
- Facebook comments
- Internet posts
- Internet yellow page listings
- Emails

If you put it online, the other side will see it.. and they will get mad... and sue you.

Here it is in an easy to understand formula

EMPLOYMENT CONTRACT+ ON LINE AD of NEW BUSINESS = LAWSUIT

I have even seen the following

NO EMPLOYMENT CONTRACT + ON LINE AD or LETTER ADVERTISING NEW BUSINESS = LAWSUIT

My advice: Don't breach your agreement.
or
Don't announce your breach on the Internet.
or
Don't be surprised when you get sued for openly breaching your agreement.
or
Don't be upset when I tell you the Linked In update attached as Exhibit 1 wasn't a great idea.

VIRGINIA LAW ON NON-SOLICITATION AGREEMENT

2011-08-03T08:30:00.003-04:00

Some businesses have signs that say: NO SOLICITORS / NO SOLICITING.

This means they don't want the yellow page guy (or the "fugitive recovery specialist" who walked into my office last week to offer his very unique services) to just show up and want to do business.

The Virginia Criminal Code prohibits certain activities including soliciting, encouraging, urging, exhorting, instigating or procuring another person to do a certain things, usually bad, harmful, wrong and criminal things.

But what does it mean when you sign an agreement that you will not "solicit" customers? What are you actually agreeing to?

Almost every week someone asks me, Dan or the "Google" (and I see it on our website counting software) If a client calls me, is that considered "soliciting?"

Answer: Maybe

Virginia law on non-solicitations is not defined by the Virginia Code. The word, and therefore the activity prohibited is defined by the four corners of your contract. So the answer as to whether or not a client can call you and you do work for them under your non-solicitation agreement, is found in your exact agreement.

This means each and every contract, circumstance, client and call must be considered on an individual basis.

Most of the time I advise folks: No, the language of your contract does not prohibit you from taking a client phone call, but the spirit of the contract and therefore perhaps the judge's interpretation of your contract does prohibit you from working for clients. So, if you want to get sued, go ahead and do work for them and argue to the judge how you didn't make the initial phone call or contact and therefore are not in breach.

Harsh I know... but the law is really not about "technicalities" or loop holes as people would have you believe. It is really about what you agreed to, in writing, and whether or not you are violating that agreement.

SOMETIMES YOU NEED A NAP

2011-07-28T08:55:00.002-04:00

My one year old niece gets grumpy, and everyone says they see a nap in her immediate future. Getting some rest, taking a breather is a good way to avoid melt down.

Were you tempted to tell you boss to go fly a kite this week? That the clients love you more and you are going to take all of his customers and beat him all the way to the bank?

Were you considering a grand exit where you left and worked for a customer thereby making your boss' company obsolete to a small extent?

Or worse? Just leave and everyone will stop doing business with that duface?

I would suggest the one year old approach of stepping bank, taking a break, maybe a nap. During this rest I recommend you have an attorney discuss your options with you. And then, when you feel ready to make a change, it will be better planned, less emotional and less likely to lead to the Court house.

PLEASE DON'T

2011-07-26T12:30:00.003-04:00

post your new business on Linked In within months of leaving your old job

Friend your old customers on facebook

Create a new website that talks about all the work you can do

Email old clients your new Contact Information

Have a meeting and tell your old colleagues you are leaving and opening a new business in competition with your current employer

Take Client Lists

Any of the above.

Unless or until:

1. You have a release from your non-compete;

and

2. The above actions have been specifically sanctioned by your old employer;

and

3. You have $30,000 in the bank to pay for attorneys fees for when you get sued.

All too often people assume that if they aren't being sued right away, or they don't have a non-compete, that there are no legal consequences to their actions.

The following is true under Virginia law:

1. You can get sued and not have an employment agreement

2. Customers can be deemed trade secrets

3. Talking to customers can be deemed Business Conspiracy or tortious interference of contract

4. Posting online could lead to litigation

So Please don't... do any of the above without getting professional advice.

NON - COMPETE BOOK AVAILABLE FOR YOUR KINDLE

2011-07-25T10:31:00.003-04:00

You needed it yesterday.

A book.

On non-compete agreements and employer / employee relationships.

Because you are heading to the beach today and need to spend a few days planning, discussing your options and making an exit strategy.

So now you can buy our "How to Beat your Virginia Non-Compete" for your ebook - Kindle, etc. on Amazon.com.

Learn about your fiduciary duty to your employer.

Read about Virginia Trade Secret Act.

We even have special chapters for physicians and financial advisers.

To buy today, visit amazon.com.

And call our office should you need to have your contract reviewed.

EBOOK ABOUT NON-COMPETE AGREEMENTS

2011-07-20T09:54:00.002-04:00

I get it.

These days, folks want information and they want it fast. They don't want me to mail them our book on non-competes, they want to read it in five minutes so they know by Monday morning whether they can quit that job and start their new venture.

Although you have long been able to buy our book (HOW TO BEAT YOUR VIRGINIA NON-COMPETE) on Amazon.com and order it from our office, starting Friday it will also be available in ebook format on www.amazon.com. We will share the link and hopefully, you will share the book with others.

BEACH READ ON NON-COMPETES

2011-07-18T11:20:00.003-04:00

I just got back from a week away.. and it was lovely.

No emails.

No calls.

And I read books about how to be the best version of my self at work, home etc. Time off allows you to plan, think, dream and explore.

It occurred to me on my break, that many of my future clients may use a week away from the office for the same purpose and I wanted to plant a few seeds before you take that break to plan your next job, business, career or whatever you have on your mind.

To begin:

1. DON'T IGNORE IT

If you have a non-compete, you need to review it and have it reviewed before you leap. The run and hide and hope they don't find out method almost never works.

2. EVEN IF YOU DON'T HAVE A CONTRACT - be CONCERNED

You are not off the hook simply because you don't have a written contract. You still have duties under Virginia law that prohibit you from contacting clients (trade secret, tortious interference, fiduciary duty) and taking certain action.

People assume that if no contract - they are free to act as they please.
They assume wrong.

3. WAIT TO PLAN YOUR NEW BUSINESS

I have never seen it work out when employees spend months on the company dime, while planning a competing business. Don't do both at once.

Need more advice? Request our book. It is the perfect Summer Beach Read while you plan your next move!

RECENT VIRGINIA DECISION IN A NON-SOLICIT CASE

2011-07-07T11:44:00.004-04:00

Va Lawyers Weekly reported the following yesterday:

"An auto-detailing business cannot recover from its former employer who made plans to start a competing business while still employed by plaintiff; a Chesapeake Circuit Court says plaintiff’s non-solicitation clause is facially overbroad because it would prevent defendant from offering his services as a “concert promoter, fishing guide, sous chef or plumber,” and plaintiff has failed to prove any damages.

This is another Virginia case arising from the machinations of the “rough and tumble world comprising the competitive marketplace.” Plaintiff Integrity Auto Specialists is in the business of automotive reconditioning or detailing – preparing vehicles for sale at various automobile dealerships. On April 18, 2005, defendant Phillip Meyer entered into an employment contract with Integrity. While employed by Integrity, Meyer serviced four dealership accounts: Colonial Auto Center, Battlefield Ford, Jim Price Chevrolet and Cross Roads Chrysler Jeep, all located within the Hampton Roads market. After formulating a plan to begin his own auto detailing business, Meyer contacted the managers of these four dealerships, informing them he was leaving Integrity. Upon the dealers’ inquiries, Meyer revealed that he was leaving to start his own detailing company, which would be “up and running” within a month.
Defendant ended his employment with Integrity on June 18, 2009, to begin management of A Clear Solution LLC, the detailing company he previously formed on May 27, 2009. Before terminating his employment with Integrity, defendant performed work for two of the dealerships, Colonial Auto Center and Battlefield Ford. Integrity sued for breach of fiduciary duty and of duty of loyalty; breach of contract, tortious interference with contract and/or contract expectancy; and violation of the Virginia Uniform Trade Secrets Act...

Judgment for defendant."

The case is Integrity Auto Specialists Inc. v. Meyer.

Kevin E. Martingayle is the winning attorney.

One ruling in this case that I am most grateful for, is the discussion and explanation as to how the non-solicitation is overbroad. The issue is whether you can solicit old clients regardless of the business venture, services offered etc.

I see this all the time in contracts. "Employee will for the period stated in the above paragraph, refrain from directly, indirectly, offering or performing any services to employers customers, clients, etc."

When I see this, I advise my clients that the provision is likely overbroad. If you wanted to open a hot dog stand outside of an old client's office, you would not be harming your old employer - so I think the Court will find this provision to be overbroad.

Although the Judge in Chesapeake didn't use my hot dog stand analogy, the point is clear. If there isn't a link between the business at issue, and the restriction, then the restriction will not be upheld.

Clearly, these cases are hard to win. We have said that before. BUT, it doesn't stop employers from trying.

Congrats to the defendant on this one. Sadly, it is not really a win when you have to pay attorneys fees but we are excited for you anyway.

LINKEDIN AND NON-SOLICITATION: WHAT IS THE CONNECTION?

2011-07-06T13:01:00.010-04:00

What is LinkedIn? Almost everyone is aware of LinkedIn the business-related social networking site with reportedly over 100 million registered users. Business folks use the site to find jobs, people and business opportunities.

What is a Non-Solicitation Agreement? This type of agreement is usually entered into between an employee and his/her employer. The agreement typically prohibits the employee from leaving the employment relationship and taking co-workers or clients/customers to his/her new employer...sort of an "anti-pirating" agreement. However, companies who work together on certain projects can, and often do, enter into these agreements.

What is the connection between LinkedIn and Non-Solicitation Agreements? We see situations in which two companies who work together on specific projects enter into a Non-Solicitation Agreement which prevents each company from hiring away the other company's talented employees.

The interesting part of the story is how creative the company doing the hiring can get in getting around a Non-Solicitation Agreement. Can the hiring company just place an advertisement in the "Help Wanted" section of the classifieds and hire any responding employee from the other company to the Non-Solicitation Agreement and argue "we didn't solicit your employee...she just responded to a "Help Wanted" advertisement in the newspaper? Can the hiring company circumvent the Non-Solicitation Agreement by using the business-related social network LinkedIn? I don't know the answer to the first question but we may now have an answer to the second question.

The case is Enhanced Network Solutions Group, Inc v. Hypersonic Technologies Corp. decided by the Indiana Court of Appeals on June 30, 2011. Enhanced developed software, and had a relationship with Hypersonic, which modified existing software. The two companies often jointly bid on projects together and were parties to a Non-Solicitation Agreement. In short, the Non-Solicitation Agreement provided that both companies were to...refrain from soliciting or inducing, or attempting to solicit or induce, any employee of the other Party in any manner that may reasonably be expected to bring about the termination of said employee toward that end . . . .

And guess what happened next? Hypersonic posted an open position for an outside sales representative to "its LinkedIn webportal." An Enhanced employee saw the posting and informed the President of Hypersonic that he was interested. After this, the employee met with Hypersonic's owner and hammered out a deal. Hypersonic then filed a complaint for declaratory relief regarding the enforceability of the agreement between Hypersonic and Enhanced.

The court looked to the dictionary definitions of the "solicit" and "induce" and concluded that Hypersonic did not solicit or induce the Enhanced employee to terminate his relationship with Enhanced. Interestingly (and correctly to my way of thinking), the court noted the agreement precluded Hypersonic from soliciting applications, but nothing prevented Hypersonic from talking to Enhanced employees if they reached out to Hypersonic.

My Take: This issue is far from settled but I think the Indiana Court of Appeals got it right. For a further discussion on this topic and the court's ruling, check out the Technology and Marketing Law Blog written by Eric Goldman.

LEGAL AWAYS AROUND YOUR VIRGINIA NON-COMPETE

2011-07-05T09:28:00.002-04:00

Someone googled that this week and ended up on my blog.

It is a good query: LEGAL WAYS AROUND YOUR NON-COMPETE

So dear Googler, here are the legal ways in Virginia to get around your non-compete:

1. Don't sign one.

Most likely that has already happened so I am wasting my time with number 1.

2. Get a Release.

That is where you ask your employer for a new contract that says you are released from your old one. Sometimes, this works. Sometimes, it does not work. Often times you need a little cash to grease the wheels but a few dollars up front to avoid litigation, nasty gram letters and attorneys fees for months is a pretty good investment in my humble opinion.

3. Don't breach it and you don't need to get around it.

I know. I know. You have been working in the industry for 27 years and not breaching it is not a valid option. You have a right to work after all - right? (No, not really - read my blog on Right to Work)

4. Go to Court and ask the Judge to tell you it is not binding.

Sounds simple. It isn't. You file a Declaratory Judgment Action your employer or ex-employer will come at you like a spider monkey with expensive lawyers in a counter lawsuit. This is rarely simple and rarely the best way to clarify the issues.

5. Go the distance in court - let them sue you!

I am not a gambler. Litigation is a gamble. You could win. You could lose. You could be enjoined from working (prevented) and you will certainly have to pay attorneys fees.

So Google, you asked, and I answered. These are the best legal ways around your non-compete and none of them are especially fun.

BOOK OF NON-COMPETES, CHAPTER 1, VERSE 1

2011-07-01T12:39:00.005-04:00

As a child I knew my Mother, a Godly woman, believed in three things as being definitive sources of wisdom:

1. The Bible
2. Good Housekeeping Magazine
3. My Uncle Dwight

This was clear at even a young age. If Good Housekeeping printed it, or my Uncle said it, it was gospel. That was it. No questions asked.

Virginia employees, like my Mother, all have sources on which they rely. You may be a Washington Post disciple, or Slate.com fan, but where do you turn when you need advice, legal assistance and help in escaping a non-compete agreement?

I hope, you turn to a professional and not your cousin, a magazine or the Google.
Sometimes, the Google can be wrong.

For example. I googled the following: is VA a right to work state - can they make me sign a non compete?
And the Google lead me to this online forum where a few well meaning folks claimed to know the law on non-competes:
http://forum.fierceboard.com/threads/non-compete-agreements-what-do-they-mean-what-are-they-worth.16266/page-2

Guess what folks, the google is not always right. And neither is the guy on the above thread. And neither are journalists all the time, or well meaning friends who give you advice at a picnic.

If you need to know whether your agreement is valid, and how to handle that, call a professional. Or my Uncle Dwight. Or read Good Housekeeping. It works for my Mom.

LINKED in to LITIGATION

2011-06-27T13:35:00.002-04:00

I was a divorce attorney for years. Sad as it is for me to admit it, non-compete litigation reminds me a great deal of domestic law.

Two people, who used to have mutual respect for one another, bound in a single goal / partnership, now do not trust a single word the other utters. Good will, is over. Revenge and making the other side feel your pain is the new daily goal.

And with that evolving goal to make someone suffer, comes a love for Internet stalking.

If Match.com and EHarmony are ways to stalk your ex- in the dating world, LinkedIn is the same for the business community.

Is she dating already?
Is he working for the competition?
Is she stealing our customers?
Are more of our vendors linked to her than I?

Sometimes all you need is the help of Google to find the answers every stalker wants to know.

And so my advice to newly separated couples, those in love or employment is simply:
USE YOUR HEAD - and DON'T UPDATE YOUR EVERY MOVE ON THE INTERWEBS.

I don't care if you want customers to know about your new job... or that you are being invited to link to your new colleagues. Just don't do it. Take an Internet vacation for a few months. No updates. No status changes. No posts. No new connections. No Internet updates on your life, Period.

More and More I am seeing suspicious employers assume ex-employees are in breach of an agreement, only for the rumor to be confirmed online. Or, a seemingly harmless enterprise looks bad and competition like because it appeared in your inbox the same day someone left your employ.

So please. For those newly separated, in marriage or in business, consider whether you really want the whole world to read what you just posted. And consider if it is worth the risk.

WHY SUCKING UP SAVES MONEY IN NON-COMPETE CASES

2011-06-21T14:51:00.002-04:00

Yesterday I wrote a blog about communication with your ex-employer and what I recommend you do and NOT do.

I asked, "Why do I like suck-upiness?" Why do I recommend it?

I recommend it because it works.

Kindness almost always works better than being a mean old jerk.
Being gracious almost always works better than a threat.
Honesty almost always works better than secrecy.

So that is why I don't recommend threatening emails or letters in the course of non-compete work. This is why I recommend something nice that makes everyone feel like you are not a threat.

WHAT NOT TO WRITE

2011-06-20T10:56:00.005-04:00

I am not a tv watcher but I am vaguely aware of a TV program where these two very opinionated fashion types show up in your closet and tell you WHAT NOT TO WEAR. The opinionated fashion types point out your closet flaws, mistakes and try to help you find your new best self.

Essentially, that is my job when reviewing a non-compete or advising behind the scenes on a job transition.

Employee calls - says "hey, look at this agreement or this cease and desist letter, and then look at my response and tell me if I should send it?"

Ok. I open the draft email and see the following:

email

_________________________________________________
to: boss
from: ex-employee
subject: GOT YOUR LETTER JERK

dear boss:

i got that snotty letter from your incompetent jv attorney. Did she take the bar last week? Anyway, go ahead and sue me. My lawyer, much taller, stronger, smarter and generally better than yours, and he says the contract is garbage and should only be used as a coaster or to wipe his,... well, you get my point.

So sue me. I really don't care. In fact, I would like to bring up the time you told me you cheated on your taxes, your wife, and told your kid he was dumb all in the same day. Or maybe, I can be asked on the stand whether or not I think you know how to run a business. Don't forget genius, the clients all went with me because you spent your days at the Gold & Silver Club rather than making sales calls.

So, before you try to claim I am in breach of my contract - you should know, that I've been told, no Virginia judge will ever uphold that contract so you are wasting your time and money by threatening a lawsuit.

see you in court, sucker!

I love these letters. I love them because they are written from such a pure place, one of utter anger and revenge. But, they never turn out well. They always always always lead to unnecessary attorneys fees, litigation costs and well frankly, make the employee look like the jerk.

What I would rather see is the following:

dear boss:

I got your letter. I am so very sorry. Please know I so loved working for you and am so sorry you feel I am in breach. Don't worry. out of respect for you, and your family, I would never compete. And I am sorry you felt you had to hire a mean old attorney. Please, feel free to call me directly and we can work this out like old friends. Anyway - so sorry. Give Carol my best.

Why do I like the later email, over the former one? With all that sappy suck-upiness?

More this week... and I will explain.

STRENGTH IN NUMBERS

2011-06-13T08:13:00.002-04:00

What if one employee says to their employer, "I am not signing this non-compete. It is unfair, over broad and I will not sign it."

Do you think the employer will negotiate?
Be reasonable?
Try to make amends?

NOPE. Neither do I.

I think the employer will say - "fine, sign and stay. Refuse and pack your bags."

But what if 3 key employees say - "We respect your need to protect your business and will agree to confidentiality agreement, however, we cannot agree not to work in our industry for 3 years. Please help us by amending this language."

Do you think the employer may be tempted to negotiate? Make 3 employees happy over losing 3 employees?

I think so. At least, I am hopeful.

Under Virginia law - if you sign a non-compete, you have to assume you are bound by the terms until a judge either says it is NOT BINDING, or your employer gives you a release. So why sign something you know you can't live with? Why not try to come to a compromise where everyone wins?

Why not? Because it is scary to ask for what you want. And scary to risk losing your job. But isn't it scarier to live knowing you could get fired tomorrow, and couldn't work for years or be forced to spend thousands on litigation?

PRESS YOUR LUCK (& your employment agreement)

2011-06-06T15:09:00.004-04:00

I vaguely recall a game show from the 1980's called Press your Luck. Something on the game show required contestants to press a button and I recall many older women jumping wildly screaming "no whammies no whammies no whammies."

A whammy, was some kind of cartoon monster that made you lose a turn (and looked like this).

Anyway. I am beginning to think that show was really on to something.

Life always has risk. And so does working in your industry with a non-compete agreement from your prior employer.

When folks call here, I always provide advice on what they can and cannot do under the terms of their Agreement. I also explain the chances of their Agreement being upheld. Then I tell them they can always be sued, even if they are not breaching... but the chances of getting sued sure do increase if you breach the Agreement at issue.

Some clients, who don't mind risk, ignore me and compete.

These individuals are pressing their luck, waiting to get through the non-compete statute of limitations without getting sued. Some succeed. Many do not.

Problem is, when they do get served with a lawsuit, cease and desist etc., (a Whammy) the question is really going to be "Why were you working for X? Didn't you know it was a breach?"

And their only honest answer will be, "Well, I was hoping not to get caught."

Sadly, judges and juries don't like this. Not at all.

So please. Remember. Life is not a game show. Pressing your luck in the business, contract world is rarely advisable. And please get legal help so you don't end up with a whammy.

FIDUCIARY DUTY UNDER VIRGINIA LAW

2011-05-26T17:22:00.002-04:00

While you are employed by a company, regardless of whether you have a contract of employment, you are not to compete with that employer, as a matter of Virginia Common law.

Example:

Work in a used car lot - open your own on the side and tell customers about your great deals

Work for commercial contractor and do contracting work on the side - tell clients you could out bid the work and do it yourself cheaper

Home Health Nurse - who gets paid to sit for Ms. Susan, offers Ms. Susan's family a cheaper rate for additional hours not through the agency

Now. Whether it seems fair or not, you are not to compete with your employer while you are still working for him.

If you do - they can fire you, sue you and ask for money damages.

So please, think before you apply, offer, act or try to sell your services on the side. You don't want to end up in Court, contract or not, for breach of fiduciary duty.

PERSONAL v. LEGAL QUESTIONS WHEN ASKED TO SIGN A NON-COMPETE

2011-05-24T09:21:00.005-04:00

Folks, very nice, smart, intelligent folks ask me all the time:

????????????????????????????????????????????

"What should I do? Should I sign this non-compete?"

And my response is "Well, that is not really a legal question. It is a personal one. I have explained the risks, what it means legally, your rights and restrictions. Only you can decide whether you are willing to live with those terms."

Ugh.

I know. People want more than insight and information. They want help. And really, I can't give a great deal of help on personal issues. Just ask my husband. Maybe a life coach, counselor, spouse or minister is better suited for some of those questions.

What we can do, is the following:

review your Virginia non-compete / employment Agreement

review the Corporate Structure of your employer to see if they are still bound by the Agreement

analyze, evaluate your Agreement

share our opinion about the Agreement

Discuss whether it appears to be enforceable, reasonable under Virginia law

Discuss whether your new job would be an actual breach of the Agreement

Discuss whether your new job will be perceived as a breach of the Agreement

Discuss a strategy to avoid litigation

Discuss a strategy to buy out your Contract / Agreement

Talk Virginia Tech football or Jane Austen classics (I will let you guess which is my specialty and which is Dan's specialty)

project the costs of business tort litigation

If you want to do any of the above, contact us. If you need someone to help you decide what to do based on the above information, that is what Mom's, spouses and friends are for... Sadly, that is a personal question outside the realm of legal advice.

CAN THEY PREVENT YOU FROM WORKING?

2011-05-16T10:51:00.002-04:00

We get calls frequently from folks who have received a letter, lawsuit or verbal threat from their former employer. The threat looks like this:

"You are in breach of your agreement. We will ask the Court to enjoin you from working at your current job."

To enjoin someone means to PREVENT them from working.

Under Virginia law, you can request (and sometimes can get) an injunction (Court Order) against an employee from working.

The court will look at the following:

1. Harm to Employer
2. Harm to Ex-employee
3. Likelihood Employer will succeed on merits of lawsuit if they sue you
4. Public Policy

Now, those are pretty vague factors. What will the court look at?

- how long were you an employee?
- what are you accused of doing?
- Breaching your contract? Taking trade secrets? Stealing customer lists? Bad-mouthing the company?
- What is the damage?
- Can you calculate it in money? If not, if you are stopped from working, will the harm end?
- Did you agree to the contract?
- What if there isn't a valid contract?
- Is what you are doing prohibited?

Bottom line.... Courts do grant injunctions in some circumstances. They can prevent you from working if your ex-employer takes you to court, files a lawsuit, etc.

Let us know if we can help --- and actually, don't wait until you get sued to consider these issues. Litigation is so much more expensive than behind the scenes advice.

QUITTING YOUR JOB TOMORROW? HERE IS A LIST OF DON'TS

2011-05-06T06:08:00.001-04:00

If you are leaving your job tomorrow and don't want to get sued, don't do any of the following:

1. Don't take customer lists or customer addresses.

2. Don't email your customer contacts or clients to tell them about your new "competing business."

3. Don't copy your employer's policy manuals or other sensitive or proprietary documents, including forms.

4. Don't think you can avoid the above prohibition by emailing those same documents to your personal email account (or even a friend's account).

5. Don't take price lists or vendor lists...even if you created the document yourself.

By following the 5 DON'Ts above you might just avoid getting sued.

JUST WHAT IS A "TORTIOUS INTERFERENCE WITH CONTRACT"?

2011-05-05T06:52:00.000-04:00

More and more frequently employers, in addition to suing their ex-employees for breach of their non-compete agreement, are also claiming the ex-employee is guilty of the "tortious interference" of the employer's contractual relationship with its customers.

Just what does this mean? The answer is "it depends." It depends on whether the contract at issue is for a stated duration/length of time or terminable at the discretion of either party(also called "terminable at will contracts").

Under Virginia law, if the contract is for a stated duration of time the following elements must exist to prove a claim of tortious interference with contract/business expectancy: (1) existence of a contract or business expectancy; (2) knowledge of that contract or expectancy by the ex-employee; (3) intentional interference by the ex-employee inducing or causing a breach or termination of the relationship or expectancy; and (4) resulting damages.

If the contract at issue is terminable at will and not for a stated period of time/duration, Virginia law requires proof of the four elements above but adds a requirement of evidence to establish the ex-employee interfered by improper means or methods. In other words, if the contract was terminable at will the employer must prove the employee induced the breach of contract by intimidation, bribery, violence, fraud, etc. This additional element of proof makes it very difficult for the employer to be successful in cases where the contract at issue could be terminated by either party at any time.

My Take: Employees should not be intimidated by their ex-employer's claim of "tortious interference" with contract....especially when the contract is not for predetermined length of time.

STATE LAW AND NON-COMPETE AGREEMENTS

2011-05-04T08:56:00.003-04:00

A great number of people who call our office live out of state, but have non-compete contracts or employment agreements that state they are written under Virginia Law.

Often, we will get calls from Virginians who assume we can assist them with a non-compete agreement but upon further examination, we discover Virginia law does not apply to their agreement. The law of another state applies.

How can you tell what state law applies?

Well - the first place to look is in the contract itself.

Many, but not all Contracts have what is called a CHOICE OF LAW provision - a small paragraph (usually toward the end of the Contract) that states what Court or State law will apply to the formation and application of the Agreement.

Choice of law provisions are often binding because the Court assumes you read the agreement and agreed to be bound by the law of whatever state is listed.

IF you are asked to sign a non-compete agreement and another state law applies, you should find out what the law in that state is when it comes to non-compete agreements. TRUST ME, EVERY STATE IS DIFFERENT.

Florida, Oklahoma have statutes that apply to whether non-competes are reasonable. California law finds employee non-competes to be against public policy. Georgia is enacting a new law right now about them. In Virginia, there is no Code statute, they are determined on a case by case basis.

Bottom line. EVERY STATE LAW IS DIFFERENT.

So what if you agree to be bound by another state law - does that mean you will be forced to go to Court in another state?
YES - you may have to do that.

And you may have to hire an attorney in another state.

So if you are presented with an Agreement, and another State's law applies, find out why. Are their laws more favorable to employers? Is the company headquartered there?
And if you don't want to be bound by the law of that state, you can always try to get your home state / Courts to apply.

Bon Chance - which is GOOD LUCK!

DAMAGES

2011-05-02T10:31:00.003-04:00

Non-compete cases are allot like marriage. No really. Hear me out on this one.

Lets make the following associations:
SMALL LIE = CONTRACT BREACH
WIFE'S SADNESS = Employer's ANGER
WIFE'S ANGER = MAJOR HARM to EMPLOYER

At the end of the day, it not only matters what you did, but whether your actions caused harm and damages... and, how much harm and damage you cause by your actions matter allot, especially to a judge, jury, ex-employer or wife.

For example.

EXAMPLE 1
Your wife, on a good day, asks you which dress, "the red one or the blue one that makes her legs look big?" You lie and say "Red one... by the way, the blue one makes you look lovely too."

Now. There is no damage in that statement. It is a lie, a breach, but your wife is happy. You have caused no damage and likely, the comment, the breach will not evoke further consequences.

EXAMPLE 2
Your wife, asks you which dress, "the red one or the blue one that makes her legs look big?" You say "Red one... the blue one is just too short."

Now. There could be damage in that answer. Maybe, you just hurt her a little bit. It wasn't a lie and therefore not a breach, but it did cause her a minute of harm.

You say something nice a minute later, all is forgiven and no consequences.

EXAMPLE 3
Your wife, asks you which dress, "the red one or the blue one that makes her legs look big?"

You say "definitely not the blue one. It does make your legs look big"
Now, you haven't lied, or breached but the damages are huge. She is angry at you and now doesn't want to go out at all. She feels unloved, mad and you are to blame. For everything.

This is exactly how employers act. Sometimes they let a breach slide by. Sometimes, they are so hurt (even irrationally so) by something an ex-employer did, they blow up. They run to Court. They scream and yell and demand justice. And if they can prove actual harm, loss of business, etc., their rage will be justified by the law and their righteous anger fueled.

So. Here is the moral of the story.

Be smart.
Be thoughtful. Do what you can to minimize the damage and try not to hurt anyone. Your wife, your ex-employer, etc. If you don't take my advice, you may need more than one attorney in your future.

RIGHT TO WORK LAWS IN VIRGINIA

2011-04-27T08:43:00.003-04:00

I was picking up a package at our local Fed Ex warehouse the other day and saw this very stunning poster on the waiting room bulletin board.

I love it. No really. LOVE IT. Why?

Because it is so entirely misleading.

It says --- IF YOU HAVE A RIGHT TO WORK in bold letters. While I think this means only those who are here legally have the right to work, I remain unclear as to the poster's purpose.

Then in small letters, it says you have a right to work free from discrimination for your national origin or citizenship status. AND, if you are not yet a citizen but can work here legally (ie - papers) you can't be fired for being a non-citizen.

Now. Why do I hate this poster so much?

Because it fuels the flame so to speak, that "RIGHT TO WORK" actually has something to do with being fired, or having a non-compete. Now, I admit the poster doesn't say that but it uses the phrase RIGHT TO WORK in big old bold letters, while explaining some small aspect of federal discrimination law in small print.

Bottom line.

"RIGHT TO WORK" in Virginia means you can't be forced to join a union.
RIGHT TO WORK on this poster means if you have legal work papers, you can't be fired simply because you are not a citizen or are from another country.

There are no laws in Virginia, state or Federal, that prevent an employer from suing you if you work for a competitor, breach your non-compete, take customer lists etc. Even if you are fired, you don't really have a "right to look for work and take whatever job is offered."

Please read the fine print. PLEASE.

NON-COMPETES AND WHERE YOU ARE LIKELY TO FIND THEM

2011-04-26T11:45:00.003-04:00

In the Spirit of the Season (Easter) and the traditional EGG HUNT where small children toddle across green grass in search of brightly colored plastic eggs filled with treasures and treats, I thought I would write about the ever popular NON-COMPETE HUNT.

What?

You haven't heard of it?

Well, like its' cousin the Easter Egg, a non-compete can be found in various places, often hidden out of plain sight.

You might find them in any of the following places:

- an offer letter
- employee handbook
- Franchise agreement
- Contract entitled "non-disclosure"
- Contract entitled "employment agreement"
- Contract entitled "non-solicitation"
- Severance Agreement
- Stock purchase agreement
- Bonus structure

In my state, you do not have to put the language in bold, or CAPS or really make the language clear. Employers and their creative attorneys can place these little suckers in any manner of documents, using any kind of language they so chose.

So, again, keeping with the spirit of the season, I encourage the following.

Dig deep.
Look behind the hydrangea bushes in the deepest darkest places of your employee handbook, or in contracts signed years ago.

Dig out behind the concrete cat statute to look for eggs, or in your offer letter to find some non-compete language.

The non-compete hunt rarely will lead you to foil covered chocolate treats, but you need to know what you have agreed to. And for that reason alone it is worth the hunt.

BUT.... I THOUGHT NON-COMPETES CONTRACTS WEREN'T ENFORCEABLE

2011-04-14T09:50:00.003-04:00

When you bought your car, and signed a contract that said you would pay X$ a month or they would come take your car away, did you understand it was a binding contract?

Or what about the time you loaned your crazy cousin Joe $10,000 and had him sign a promissory note that he would pay it back, with interest in 3 years. Did you think that document was a binding contract?

Or what about the sales contract on your house that spelled out what was conveying with the property. Wasn't that a contract?

So why in the HECK do all of the nice people of Virginia say to me "I signed an employment contract with a non-compete and non-solicitation provision, but didn't realize those were binding or enforceable?"

No really.
I understand there are rumors about you having "a right to work" or a right to earn a living. But did it really never occur to you that the contract you signed, might actually be, well, a binding contract?

Ok. enough venting. I know there are many of you who were told non-competes are not valid in Virginia.... but those folks were not telling the truth.

They are often valid. Often enforceable. And often lead to the court house steps.

Need help in understanding what your agreement means?
We would be happy to help.

WHY DAMAGES MATTER IN A NON-COMPETE CASE

2011-04-04T11:38:00.002-04:00

I tell clients all the time, "While I think your ex-employer can sue you, make you defend yourself in Court and pay a ton of money in attorneys fees, I don't think he or she or it can prove damages related to your actions."

My analysis means little as many employers will proceed with cases even when they can't prove damage. But, at the end of the day, damages remains an issue.

If Employer can prove damages, I don't want to take my employee defendant to Court because he or she could lose.

But if the employer cannot likely prove damages, Court may be worth the risk.

Example:

Even if you breached your contract, and went to work for X company, a major competitor, and your employer didn't lose a single client, or customer, they may not have any valid argument for damages caused by your breach.

Or, you told your colleague to quit and come start a business with you, may have been an actual breach of your non-solicitation, but if your colleague did nothing but laugh, no damages related to the breach exist.

Long and short, in all contract cases, you have to prove damages at some point.
And you don't get all the gravy like punitive damages, attorneys fees, treble damages etc., unless you can prove actual damages.

So often times, my argument to the Court really rests on there being NO ACTUAL DAMAGES. SO WHAT if my guy breached the agreement, Your Honor, they can't prove they lost a dime and without damages, they can't win!

Oh, and the Supreme Court of Virginia, just agreed with me on this. (I realize they did not agree with me, they just wrote a decision that reflects Virginia law on which I base my opinion)

In Syed v. ZH Technologies, a business tort case with six separate counts including my favorites, tortious interference and breach of fiduciary duty, the jury held for the plaintiffs, but awarded no money - $0. in actual damages.

The Supreme Court said if the jury gave them only $0 in damages, essentially, it was a defense verdict and you couldn't get attorneys fees.

This is great news for employees. What was a $700,000 case because of attorneys fees, was reversed and made into a defendant victory.

So yes, DAMAGES do matter. Maybe not to an angry employer who wants to sue you --- but at least to a judge and jury.

DEPARTMENT OF JUSTICE FAVORING HIGH-TECHNOLOGY EMPLOYEES

2011-03-30T10:38:00.004-04:00

The Antitrust Division of the Department of Justice (DOJ) has filed two complaints in District of Columbia federal court alleging that no-solicit agreements among high-tech employers constitute an unlawful restraint on trade in the market for highly-skilled employees in the technology sector.

In United States v. Adobe Systems, Inc., the DOJ alleged that do-not-call agreements among Google, Apple, Adobe, Intel, Intuit and Pixar were formed as a result of communications between company executives to prohibit recruiters from contacting employees of cooperating firms to fill open positions.

My Take: This will be a very interesting case to follow. Courts and Judges always need to "see" the big picture. And, in my opinion, the big picture is that enforcing restrictive non-solicitation and non-compete agreements is bad for innovation and bad for the United States economy.

ROOFERS AND NON-COMPETES

2011-03-29T11:12:00.004-04:00

I ran across a fun and exciting discussion forum on a roofing website today, about the use of non-compete agreements in the profession. Men (and maybe some gals) in the business have been sharing their experiences, opinions and thoughts as to whether non-competes are enforceable in the industry, what could be considred trade secret, etc.

One contributer, I assume a roofer, wrote:

"What trade secrets are going to be divulged in roofing? A customer list isn't an issue because by the time a repeat sale comes around, the period following termination or resignation has long passed. Any savvy attorney would have any attempt by the former employer squashed in a heartbeat and have valid reason to counter sue for a law suit."

Yikes. I hope this guy's risk tolerance is not prevelant in the profession but perhaps it goes hand in hand with heights. Nothing scares him. Sadly, he is not correct. At least under Virginia law, even the most savy attorney cannot always squash a lawsuit in a heartbeat, and in most cases, I can't find valid reasons to counter sue. I like his approach, but my experience tells me he is not right.

Lawsuits are not easily squashed.

You can't always file a counter suit.

Sometimes you get stuck in expensive litigation for months to no end.

So please, always call an attorney in your state. I would hate for the optomistic email posting of a guy who is clearly not afraid of much, lead you astray.

DOCTORS and NON-COMPETES IN VIRGINIA

2011-03-23T11:06:00.002-04:00

Doctors often are asked to sign non-compete agreements. This should not surprise you.

Dan has written at length on Physicians and Non-competes on our blog.

We wrote an article on our website about Virginia Doctors and Non-Compete Agreements.

We even have a Chapter dedicated to Doctors in our Second Edition, How to Beat your Virginia Non-Compete.

So when Google News shared this article out of Pittsburgh today, I was not surprised. Hospital v. Doctor lawsuits are not rare. They are common place. But is that right?

I know it is crazy that a lawyer ask an ethical and moral question, but here it goes:
SHOULD HEALTH CARE PROVIDERS BE PROHIBITED FROM SERVING THE PUBLIC? Even by employment Contracts?

Is the business of medicine more important than the patients or patient care?

If Lawyers can't have non-competes because we have agreed as a profession they are unethical, why can't doctors do the same?

ANSWER: I think they should, and could.

Until that day, we are happy to review your non-compete and share what it really means.

HOW TO VOID YOUR NON-COMPETE

2011-03-21T09:25:00.003-04:00

This is how you can "void" your non-compete:

Take a deep breathe.

Swallow three times.

Touch your toes.

Turn around.

Walk away.

Exhale.

Stand up straight.

Take a deep breath.

Your non-compete should be gone.

Oh wait, sorry. That is how you get rid of hiccups, not employment contracts.

How you make a non-compete contract "void" in Virginia is much more simple.

You either

(a) get your employer to agree the contract is void - or get a release from its terms.

(b) ask a Virginia judge to hold the contract is unreasonable, unenforceable and therefore void under Virginia law.

Sounds easy, right?

It's not. Did you hear me? NOT EASY.

Option (a) usually requires out outlay of cash money.

Option (b) usually requires more cash money for the lawyers, time because Virginia judges can't decide on these things right away, stamina because the process is exhausting, and patience because if you don't get the answer you want, you have spent all this time and money in court and lost.

Makes hiccups sound fun, eh?

DENTISTS AND NONCOMPETES

2011-03-16T14:28:00.006-04:00

I recently learned of a law firm in Canada which specializes in representing dentists...now there is a niche legal practice. The law firm, DMC Law, is located in Toronto, and its website recently posted a discussion about the interaction between Canadian noncompete law and the practice of dentistry.

This discussion got me to thinking about noncompete law in Virginia and its impact on practicing dentists. To start, the analysis for dentists practicing in Virginia is the same as it is for salesmen, doctors, chefs, financial advisers, television/radio personalities, etc. The test is:

(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?

I did a quick search of reported legal decisions in Virginia and could only find one, Graves, DDS v. Ciraden, Inc., decided by the Fairfax County Circuit Court in 2004. In Graves, a dentist entered into two separate agreements with Ciraden, Inc. Both agreements (a Services Agreement and a Non-Competition and Confidentiality Agreement) contained restrictive covenants.

Pursuant to the Agreements, the dentist received over 500,000 shares of Ciraden stock, as well as leased dental equipment, leased office space, and administrative, marketing, and personnel support. In return the dentist agreed to operate a dental practice for 30 years and agreed to a Non-Competition and Confidentiality Agreement.

The noncompete language in the Agreements prohibited competition for a period of 20 years within a radius of 6 miles from any of Ciraden's offices. The Agreements also contained a liquidated damages clause which requires a payment of $ 200,000 if the dentist breached the noncompete provisions in the Agreements.

The court never ruled upon the legality and enforceability of the noncompete language, as the issue before the court was a legal technicality on whether the parties had the legal right to contest the issue.

My Take: There is no reported result for this case but, if I wore the Judge's robe in that case, I would find the agreement totally unenforceable under Virginia law. You cannot prohibit competition for 20 years! In my opinion, no court in Virginia would enforce such an outrageous provision.

VIRGINIA NON COMPETE LAWS

2011-03-15T10:14:00.005-04:00

What is a law?

According to my friends Merriam & Webster, a law is "a binding custom or practice of a community : a rule of conduct or action prescribed or formally recognized as binding or enforced by a controlling authority: the whole body of such customs, practices, or rules."

In some states, like Florida and soon to be Georgia, there are literally laws on non-competes. Written rules in the Code books that establish what kind of agreement is reasonable and enforceable, and what kind is not. You can open a code book, look up a chapter and see the written law on non-compete agreements in a few sentences.

Virginia is not like Florida or Georgia. Not only do we lack SEC football, and Gator wrestling, our law on non-competes is not codified, written down or clearly spelled out as a litmus test in a Code book.

Our law is based on common law - judicial decisions, and even then, the law states the court must consider each and every contract in light of the facts and circumstances.

So, while there is no one law on non-competes, we have years of judicial decisions that create a body of law.

You could for example, read all of those cases and conclude a 2 year non-compete may likely be held to be reasonable in Virginia, if the terms are narrowly tailored to protect the legitimate business interests of the employer.

Hmm.
Sounds complicated, doesn't it?
So while I cannot point you to the "law on non-competes," per se, I can read your Agreement, apply the body of common law and advise accordingly.

ARE YOU KIDDING ME?

2011-03-14T08:25:00.003-04:00

First of all, read this article about a 19 year old dog store employee.

19 years old
works for $8 an hour
after 1 month of work, asked to sign a non-compete
Is fired after 3 months of work
and can't find a new job in pet care businesses because of her non-compete.

Ugh.

There are two types of non-compete cases that end up in Court.

The kind where the employee can really hurt the business of their ex-employee and legal action is required to stop the wrongful acts..

And the kind where the old employer, for some reason (ego maybe) feels the need to enforce an agreement even when the breach hasn't harmed them at all.

About 75% of my cases are the later - ego driven, not business driven.

I feel sad for this kid - 19 years old, she can't afford to defend herself in Court. Nor should she have to.

Please read your non-compete before you sign and understand they can be enforced - even if unfair.

IS YOUR NON-COMPETE VALID?

2011-03-09T09:13:00.003-05:00

Hey. You. Virginia Employee.

Is your non-compete valid?
Is it enforceable?
Can you get sued by your employer if you leave?

All great questions, non of which I can answer without taking the time to review your agreement and discussing the details of the situation with you.

Clients will say "it is only 1 sentence - can't you just tell me whether it is valid?"

Sure. I could do that. If I wanted to lose my bar license and get sued when I provide an opinion on a complicated business relationship based on my quick review of 14 words.

So no. I won't do that.

Virginia courts will decide these on a case by case basis, taking into consideration the facts, the law, and the details of your case. So when Dan and I review a non-compete agreement and provide advice, we have to do the same.

Oh, and the answer to the third question is - YES. Your old employer could sue you.

HE/SHE/IT could sue you even if you don't have an employment contract. They can sue you for a bunch of great stuff like breaching duties, interfering, trade secrets etc.

They can even sue you and allege the above with no actual proof. Maybe it is unethical but there is little you can do Mr. Employee but do your best not to get sued, and ride it out while fighting back in Court.

GREAT ARTICLE ON EMPLOYEE POACHING

2011-03-04T11:10:00.002-05:00

Here is a great article on employee poaching...

http://www.businessinsider.com/how-to-poach-an-employee-from-a-competitor-2011-3

Read it.

Especially the part that says:

Watch for legal troubles
If it turns out that the candidate you’ve been
eyeing at a competitor is as good as you hoped, and you want to begin talking
with them more seriously about joining your firm, a critical step is to find out
whether they have a non-compete agreement with their current employer. If they
do, and they jump ship to join your firm, depending on the state in which you’re
based, you may be in for a great deal of trouble, including a lawsuit in some
cases. Some states take non-compete agreements very seriously. An employment
lawyer can advise you on how best to proceed.
Keep in mind that talking with a candidate who is bound by a non-compete agreement is definitely a matter of weighing the risks and rewards, according to Mike Travis, principal of Travis & Company, in Newton Center, Massachusetts. “It’s very easy to run afoul of a non-compete, and it’s very expensive to fix your mistake,” he says.Read more: http://www.businessinsider.com/how-to-poach-an-employee-from-a-competitor-2011-3#ixzz1FeENqIly
"expensive?" Understatement of the day.

OMG!

2011-03-03T11:00:00.002-05:00

OMG --- (text for Oh my Gollie! / Gosh / God in Heaven)

Did you really tweet that your boss is an old fart?
Or say on your facebook page that you "hate my job and want someone to shoot me before I have to go back tomorrow?"
Did you send an email from your work email address to your husband entitled "customers we could probably take with us when we start new business?"
Or text a colleague right before happy hour "hey - grab me at the bar, I think we should open our own firm. lets chat?"
Does your LinkedIn Profile really state that you opened your own company 3 years ago when you only quit Virginia Company Corporation LLC last week?

OMG friends.

In the words of my favorite (*only but still favorite) brother - if you did this stuff, any of it, you are "going to get sooooooooooooed."

Yes, that is sued, but longer, with a few extra oooos..

PLS (text for Please) use the round thing above your neck occassionally before logging on and running your fingers across some kind of keyboard. 4COL (text for - "for crying out loud!").

Please call an attorney before you plan a business that competes with your current employer.

Newsflash.

Even if you don't have a non-compete, or an employment contract, you could get soooooeeeed. ICBW (I could be wrong) but, in case I am not - CM (call me, today).

m.02 ---- (text for "my two cents")

L (text for Lauren)

BEWARE THE IDES OF MARCH

2011-03-02T09:22:00.003-05:00

The soothsayer warns Julius Ceasar to "beware the ides of march" and lo and behold, he gets stabbed in the back by his bff on the ides of march.

Moral: listen to soothsayers.

Now, what do the "ides of March" (aka March 15th) have to do with non-compete agreements?

Only everything.

For example, plot line of J.C.:

- getting stabbed in the back by a good friend

- getting warned that something bad will happen

- not taking the warning seriously

- consequences to being arrogant etc.

Non-compete litigation usually ignites because:

- owner feels stabbed in the back

- employee has done something not so smart, maybe arrogant, like talk to customers and clients and tell them about their new business

- employee did not listen to Lauren and Dan's blog about how to avoid litigation

So here is my advice. Beware the Ides of March.

If you don't want to get sued under Virginia law, you need to be good, be smart, keep your mouth closed and don't do these bad things:

http://www.frithlawfirm.com/Articles/BusinessNonCompeteArticles/TOPTENMISTAKESTHATLEADTOEMPLOYMENTLITIGATIO/tabid/153/Default.aspx

LOUDOUN COUNTY NON COMPETE LAWYER

2011-02-28T08:57:00.002-05:00

Hey Loudoun County.

A few of you found your way to our blog this week.

Sterling.
Ashburn.
Leesburg.
Reston.
Lucketts.

You were searching for information regarding non-compete agreements in Virginia, their validity, and your options.

This makes sense. Recently, Loudoun County was the fastest growing County in America so there are a few of you who work and or live in the area, who may be in need of advice.

Want to read the first two chapters of our new book online, HOW TO BEAT YOUR VIRGINIA NON-COMPETE? http://www.frithlawfirm.com/Books.aspx

Or you can call Mary Ann today and request the paper copy which we will mail to you: 1-866-985-0098. You can also email Mary Ann at mspencer@frithlawfirm.com

And for those of you who still live in Loudoun, I love where you live. I used to live there. I was born and raised nearby. So please take a few minutes to go to Tuskies in Leesburg and have a cold one for me, will ya?

NOW ITS REALLY GETTING BAD!

2011-02-25T10:50:00.002-05:00

I''ve shared with you my total dislike (even hatred) of non-compete agreements. They are unfair, limit employee mobility, and act as a anchor weight on the American economy.

But now...its gone way too far! Now I hear that one cupcake purveyor wants to stop an ex-employee from opening her own cupcake store. No...I am not kidding!

The original concept for Red Velvet at 314 S. Main in Nashville, TN called for pairings of upscale cupcakes with fine wines and coffees. But the shop's proposed name has been changed to Carrot, and other changes may be in the works.

The name change came after Gigi's Cupcakes, a 37-store chain, alleged that Amanda King would be violating a noncompete agreement if she operated a cupcake shop. Gigi's Cupcakes says it threatened legal action in an effort to protect recipes and other details of shop operations. What a bunch of baloney!

King, who was to be co-owner of Red Velvet with Neil Armstrong, could not be reached, but lawyer Tim Thompson said, "Neither Red Velvet nor her had any intention of violating any of the terms she agreed to."

My Take: There is no such thing as a secret cupcake recipe...and the more cupcake stores the better!

NON-COMPETE WIN FOR VIRGINIA NURSE PRACTITIONER

2011-02-24T11:24:00.003-05:00

I love it when another court strikes down a non-compete agreement as being overly broad and therefore unreasonable.

I just love it!

A friend and fellow member of the Virginia bar just sent me an article on a Virginia Beach case.

According to Virginia Lawyers Weekly writer Alan Cooper

"A Virginia Beach Circuit judge has struck a non compete agreement after a medical company sought to enforce the covenant against a family nurse practitioner who sought to start another medical business."

GREAT NEWS VIRGINIA EMPLOYEES. ANOTHER CONTRACT BITES THE DUST.

According to Cooper, "The key phrase that caused the agreement to fail: The document prohibited her from competing as a “shareholder.” That covenant would bar a former worker from owning stock in a publicly traded company and was “inherently over broad,” Judge Frederick B. Lowe said.

Apparently, there are even more goodies in this opinion.

VaLawyers Weekly reports:

"The agreement “is unlimited as to location or function,” Lowe wrote. “Patient First lacks a legitimate interest for preventing a prior employee from soliciting or hiring employees internationally and for any occupation whatsoever.”"

So in sum, the non-compete is over broad because it prohibits her from being a shareholder in any company that provides these services..

And the non-solicitation is over broad because there is no legit interest in preventing employee from recruiting old employees for any kind of work.

Love it.
Will be getting that opinion today and adding it to my list of great non-compete cases for Virginia employees.

Patient First v. Blanco

NORTHERN VIRGINIA NON-COMPETE LAWYER

2011-02-24T11:15:00.002-05:00

I am a lawyer.

I was born and raised in Northern Virginia.

And now I live 2 hours away.

But our firm, Frith & Ellerman, is actively representing employees in Northern Virginia, who need help understanding their non-compete agreements.

We can do the following for NoVA employees:

review agreements you have already signed
review agreements you have just been asked to sign
evaluate whether your agreement is reasonable under Virginia law
advise clients as to other rights and restrictions they may have under Virginia Code or common law (fiduciary duty, trade secret act, conversion, etc.)
help negotiate more reasonable agreements
help negotiate exit strategies such that a release/ buy out or new agreement is reached with your employer
advise clients to avoid certain actions that lead to litigation
***defend clients who are sued for breach of contract, tortuous interference of business expectancy, fiduciary duty of loyalty, etc.

*** only the last requires us to travel to Northern Virginia, which we are happy to do.

Let us know if we can assist you with your non-compete agreement / employment relationships today.

EMPLOYEE WINS NON-COMPETE CASE IN VIRGINIA BEACH

2011-02-24T11:02:00.002-05:00

A Virginia Beach Circuit judge has found a noncompete agreement invalid and unenforceable after a medical company sought to enforce the covenant against a family nurse practitioner who sought to start another medical business. The case is Patient First v. Blanco and was decided on February 15, 2011.

The facts of the case are straightforward. Ms. Blanco, a nurse practitioner, left her employment with Patient First and opened a similar business one month later, The Practice, Set Fee Clinic. Patient First promptly filed suit to enforce a covenant not to compete, among other issues.

The noncompete provided that Blanco could not work at a competing business within seven miles of where she worked for two years after leaving Patient First and could not perform “urgent care medical services” within 15 miles of a Patient First.

It doesn't appear the judge had any problems with the geographical scope of the noncompete agreement but found the contract unenforceable due to language that Blanco could not perform the services of the type she performed at Patient First “directly, or indirectly, for [herself] or as an agent, officer director, member, partner, shareholder, independent contractor owner or employee … .”

The trial judge ruled this language “...would prohibit the defendant (Blanco) from owning stock in a public traded company if some part of that company provided the same medical services as the defendant, and had a location within seven miles of where the defendant ‘regularly provided medical services for Patient First,” The judge noted, "...there are certainly companies that would fit these parameters that would not be in competition with Patient First.”

In essence, the judge correctly found that Patient First did not have a reasonable business interest in prohibiting this type of conduct by ex-employees.

My Take: Another Good Win for Virginia Employees!

WHAT IF YOU CAN'T FIND YOUR NON-COMPETE?

2011-02-22T11:02:00.000-05:00

If someone called me today and asked me a question about my mortgage, I could pull out the paperwork and review the terms.

If someone called me today and asked me about my cell phone contract, I would be hard pressed to find any such document. I didn't keep it. It didn't seem to matter at the time.

Sadly, many employees in Virginia treat their employment contracts, non-disclosure agreements or confidentiality agreements like I treat my cell phone contract. They don't recall the terms and didn't keep a copy for their records.

So when they decide they want to leave, move, change jobs, open a business, and they want to determine what terms they agreed to, they are literally out of luck.

We then receive the following email -

Dear Dan & Lauren:
I signed a contract in 2006. I now want to leave and start my own business. I can't find a copy however. What should I do?

Hmm. Not really a legal question. You should ask for a copy. Ask for your whole file but understand that this can be a red flag to your employer.

Or we get the following phone message:
Yes, I received a cease and desist letter from my old employer stating I signed a non-compete but am in breach. I don't recall signing one and they didn't provide a copy. How can I make them produce a copy?

Well, sadly, you can only make them produce a copy if they sue you for breach of contract and fail to attach the contract. They can threaten to sue all they want, and don't have to show you anything. Sometimes, this comes down to a game of bluffing. Did you sign something? Do they still have it?

Moral of the story is simple. Keep copies of what you signed. All of it. Even silly employment agreements you believe to be non-binding or totally benign.

HOW LONG DOES A NON-COMPETE CASE TAKE?

2011-02-21T08:59:00.000-05:00

We are asked this question frequently.

If my boss sues me or if I get a cease and desist letter, how long will the legal / negotiating process take?

Sadly, there is no way we can answer this question.

Some times, we are able to negotiate a resolution within a few days. This is when the employee realizes they are at fault and or have some legal exposure, and agree not to do what it is they agreed not to do in their contract.

Often however, if there is a dispute as to whether breach occurred, or the contract is reasonable, it could take over a year to resolve a non-compete.

If the plaintiff corporation is seeking an injunction, sometimes that could be heard by the Court within a few weeks or months, and sometimes they wait until the very end of litigation to ask the Court to rule, again, taking a year.

So, here is the answer to the question HOW LONG DOES A NON-COMPETE CASE TAKE?

Between 2 days, and 1.5 years.

Not very helpful.

We are also asked, how much will non-compete case cost in legal fees.

Again, it depends. If we are looking at two days, probably the low end, $500 to 1 year, $40,000 plus.

Again, not helpful.

Each case is different, and so are the parties involved. We will do our best to predict the future, but often times we must prepare for the worst and expect the best.

FREEDOM OF SPEECH v. EMPLOYMENT RIGHTS IN VIRGINIA

2011-02-16T10:12:00.000-05:00

If you have read a newspaper or listened to the TV news in the last 2 weeks, you may have heard about an employee who sued her employer for wrongful discharge.

Basically, the facts are:
Employee (we will call her Sue) is angry at boss, employer, and goes home and logs on to Facebook and says something not very nice, for example "Those scummy people at Virginia Corporation Inc. They are all jerks."

Someone from work, lets call him Stu, is friends with Sue, reads the post and tells Boss Man.
Boss Man fires Sue for violating company policy. A real article on what happened is here.

Sue is even madder, and sues for Wrongful Discharge.

Apparently, Sue got some money out of the deal.

Now, why am I writing about this case? I am writing to tell Virginians that they will not be afforded the protection Sue was. They will not get money if they say bad things on Facebook and then get fired. Trust me.

1. Sue was clearly in a Union which comes with certain protections and rules, etc.
2. Most Virginians are not in a Union and so they can be fired for any reason but for race, gender, religious faith or Age.
3. In Virginia, "At Will" employees have few protections.
4. Likely, the lawyer for a Virginia company would not only fire Sue, but then sue Sue for defamation.

Please, do not take this case to mean that you have some protections online. You may have the right to express yourself free from criminal prosecution, but there are always consequences.

Use your brain and DO NOT EVER WRITE ABOUT YOUR JOB, YOUR WORK, YOUR CO-WORKERS etc. on the INTERWEBS.

Maybe you didn't hear me.

Use your brain and DO NOT EVER WRITE ABOUT YOUR JOB, YOUR WORK, YOUR CO-WORKERS etc. on the INTERWEBS.

amen.

INDUSTRIES IN VIRGINIA THAT HAVE NON-COMPETES

2011-02-04T10:24:00.000-05:00

Last year I shared the list of industries where we saw the use of non-compete agreements. The list was amazingly diverse - all industries, all areas, all levels of employment.

Here is the 2010 list and it is just as crazy!

Medicine - Physicians
Medicine - Nurses / Physical Therapists
Retail (you name it)
Financial Advisers
Government Contractors
Technology Sector / IT / Software developers
Energy Traders
Home Decorators
Franchisers
Sales / Online sales
Engineers
Building Contractors / Architects / Engineers
Electricians / Plumbers
Writers
Media personalities (News anchors, etc)
Security Guards
Veterinarians
Instructors of all kinds --- horse back riding, fitness and personal trainers, etc.
Marketing companies and commercial designers

They are literally everywhere - except in the practice of law...

Watch out Virginians. Non-competes are coming to a profession near you.

VA NON COMPETE LAWYER

2011-02-04T10:15:00.000-05:00

Yup.

You found us. VA Non-compete lawyers, or, an attorneys who practice in Virginia and focus our practice on non-compete advice and litigation.

But, here is the kicker.

We don't work for companies. We work for employees, the fine working men and women of the Commonwealth who are asked to sign these terrible agreements that state they will surrender their rights to make a living.

Ok, I am being overly dramatic and perhaps whining.

We do understand a company's need and right to protect their private, confidential and trade secret information. We think Confidentiality Agreements can be a fine idea.

But does it really help a business when all employees are prohibited from staying in the trade or profession when they leave? Does it make for happier customers? We doubt it.

I go to my hair dresser because I like him, not the building he is in.
Same goes for my financial advisor.
Same goes for my plumber, and the lady who watches my pets when we go out of town, and the nutritionist who helped me...

You get my point. Relationships are important and frankly Mr. Corporate Owner, if you let go of an employee and I think that person is great, I will not likely stay your customer.

Enough soap box for today.

Regardless of our personal opinions on non-competes (we don't like them) they are often enforceable in Virginia, EVEN IF YOU ARE FIRED.. EVEN IF THEY WERE YOUR CLIENTS IN THE FIRST PLACE. EVEN IF YOU DIDN'T READ IT OR UNDERSTAND IT AT THE TIME.

Please don't sign one and if you must, call us before you decide to compete, or when you get fired etc.

Our review fee is much less then our litigation fee and I doubt anyone wants to spend the next year in Court.

FIDUCIARY DUTY in VIRGINIA --- spelled out

2011-02-01T09:43:00.000-05:00

I wrote a blog last week on fiduciary duty of employees which you should read.

The basic conclusion of the post was simply this: employees should be careful because some seemingly harmless activities, could get them in court before a judge, being accused of breaching fiduciary duty of loyalty.

I have decided that the post, while helpful, was not clear enough.

In attempt to clarify, I have created a list of stuff, things, actions that employees do that could get them in trouble and be used as evidence in a breach of fiduciary duty case:

starting a side business
sending business from your employer, somewhere else
contacting clients, customers, etc. and saying negative things about the company
taking information, documents, etc. from the company
using their work computer for personal searches - like the guy who did the following search this week from his company computer: "are my actions in breach of a fiduciary duty?"
advertising or promoting a competing business
trying to take employees with you somewhere else while still employed

Be careful out there. You could get sued and I would hate for the boss man to have a bunch of dirt that points to you as the bad guy, and the company as the good guy.

VIRGINIA NON-SOLICITATION AGREEMENT

2011-01-31T10:40:00.000-05:00

Did you sign one of these?

Does it say something like....

The employee hereby agrees that he/she will not, for a period of 18 months after his or her employment ends for any reason, encourage, solicit, induce, or invite other employees of the company, to leave the company for any reason....

or it might say

The employee hereby agrees that the customers of the company will remain customers of the company and employee will not for a period of 18 months after his or her employment ends for any reason, encourage, solicit, induce, or invite the customers of the company, to do business with you for any reason....

Now, many times - these agreements are not binding because they are unreasonable, etc.

For example.

If you were a defense contractor, who helped do IT work for DOD - and you went and opened up a hot dog stand outside of the pentagon, and were sued for soliciting the customers of your old company to buy hot dogs, I doubt very much the Court would say the agreement's prohibition was reasonable.

But, if you took customer lists, opened a competing business and sent post cards to your old customers - the Court, with those facts, might find you did violate the agreement, as well as take trade secrets etc.

So, before you dismiss a non-solicitation as being fluff, read it. Understand it and maybe have a Virginia attorney that does non-compete / contract and non-solicitation work, review it as well.

PS - do they even have hot dog stands outside of the Pentagon?

HOW TO BEAT YOUR VIRGINIA NON -COMPETE - Second Edition

2011-01-28T11:00:00.000-05:00

The law on non-competes in Virginia is not defined by statute, but rather common law, which means, case by case the body of law is created.

That means, that the law is ever changing and not as Shakespeare says, "an ever- fixed mark."

So, with that, our analysis of non-compete cases change and so must our advice.

Announcing HOW TO BEAT YOUR VIRGINIA NON-COMPETE, Second Edition.

Although we do not yet have the books back from the Publisher, we hope to make the new Volume available in February.

Until then, if you would like to get one of the few remaining copies of Book 1 - for no cost, call or email Mary Ann in our office today at 540-985-0098 or mspencer@frithlawfirm.com

The old edition speaks at length about Virginia law on non-compete agreements, fiduciary duty of loyalty, Virginia Trade Secret Act, etc. While the law has not changed so drastically that Book 1 is no longer applicable, the second edition also contains a few profession specific essays and chapters:

Physicians and Non- Competition Agreements in Virginia
Technology Sector and Non-Competition Agreements in Virginia
Broker Protocol and Non-competition Agreements in Virginia

We look forward to sharing the new book soon. Until then, let us know if you have any specific questions about the enforceability of your Virginia Employment Contract and your rights and options relating thereto.

YOU OWE YOUR EMPLOYER A FIDUCIARY DUTY OF LOYALTY

2011-01-27T09:42:00.000-05:00

Hold on. Did you know you "owe your employer a duty of loyalty? A fiduciary duty of loyalty?"

What is a "fiduciary duty?"
Well, in Virginia, it is ... ugh, when you ugh... don't compete or umm... take business and stuff from your boss, and give it to well - someone else.

Not a very articulate explanation I realize. Let me defer to the many judges across the Commonwealth who have written very detailed opinions about the subject.

Virginia Supreme Court in Williams v. Dominion Technology Partners, LLC (2003) explained:

We have long recognized that under the common law an employee, including an employee-at-will, owes a fiduciary duty of loyalty to his employer during his employment. See, e.g., Horne v. Holley, 167 Va. 234, 241, 188 S.E. 169, 172 (1936). Subsumed within this general duty of loyalty is the more specific duty that the employee not compete with his employer during his employment. Hilb, Rogal & Hamilton Co. of Richmond v. DePew, 247 Va. 240, 249, 440 S.E.2d 918, 923, 10 Va. Law Rep. 981 (1994). Nonetheless, in the absence of a contract restriction regarding this duty of loyalty, an employee has the right to make arrangements during his employment to compete with his employer after resigning his post. The employee's right in such circumstances is not absolute. Rather, "this right, based on a policy of free competition, must be balanced with the importance of the integrity and fairness attaching to the relationship between employer and employee." Feddeman & Co. v. Langan Assoc., 260 Va. 35, 42, 530 S.E.2d 668, 672 (2000). Thus, "under certain circumstances, the exercise of the right may constitute a breach of fiduciary duty. . . . Whether specific conduct taken prior to resignation breaches a fiduciary duty requires a case by case analysis." Id.

Helpful, eh? The Virginia Supreme Court says the following:

you have a duty while an employee
that duty means you cannot compete while an employee
and you may be able to plan your next job which may be in competition
but in some cases that will be a breach of this duty
and so it all depends on the specific facts of your case

While not helpful (the case by case basis stuff) - let us dig deeper.

Circuit Courts have to take this "case by case" language - and actually apply it to facts.

Roanoke City Circuit Court says - "Theft of an employer's customer lists or business information, by an employee, constitutes a violation of that fiduciary duty." Phoenix Fin. Corp. v. Radford, 44 Va. Cir. 445 (Va. Cir. Ct. 1998).

Richmond City Circuit Court says that encouraging other employees to leave, is not a breach of fiduciary duty. BB&T Ins. Servs. v. Thomas Rutherfoord, Inc., 80 Va. Cir. 174 (Va. Cir. Ct. 2010).

So. Let us revisit the question. What is the duty you owe to your employer?

It is a general duty, not to compete while an employee - or take stuff that isn't yours.
So play nice, don't compete while still employed and hopefully we won't be asking your local Circuit Court to determine whether your actions are in breach.

WHAT DOES SOLICIT MEAN?

2011-01-24T10:49:00.000-05:00

We get this question all the time:

"My contract says I can't solicit their customers.. but what happens when the customers come to me without my asking? I can help them, can't I?"

There is nothing black / white in non-compete / employment litigation.

There is no law or code section that defines the word solicit.

If your contract defines the word, then that definition applies. If not, it might takes months for a judge to determine whether or not working for an old client without initiating the contact = soliciting.

So here is my advice, for this very grey area.

Don't do it.

If it says don't solicit clients -- take it to mean they don't want you serving, speaking to, soliciting or offering services to clients. AT ALL.

Now, it is possible a judge will say solicit means just that - offer services, and nothing more.

But in order to get the Court's opinion on the subject, you are looking at months of attorneys fees, and a few court appearances. So bottom line - don't skirt the line of your contract if you want to avoid litigation. Stay away and assume the contract has a bigger scope then the exact language reflects.

And if you ignore me, feel free to call when you get sued. We are happy to help all over Central, Southside, Western and Northern Virginia.

TO FRIEND OR NOT TO FRIEND

2011-01-20T09:44:00.000-05:00

Ok folks...

Please use your brain.

What you write, blog, tweet, and who you friend on facebook, or connect to on Linked In, is visible to the entire world. And sometimes, those friends, links, blogs and tweets will be used against you in Court.

A Non-compete client "friended" me on facebook last week.
I ignored him.
Why?
Because this guy may end up leaving a company and going to work for a competitor. And if he gets sued and they ask him how long he has been planning this move... or how he knows his attorneys, and they see we have been friends on facebook for months and months, it looks odd. It looks planned. it makes him look like a jerk and he isn't.

It also looks odd if you leave a company and then two minutes later, are on linked in connecting to your old clients, vendors, etc. or writing on facebook about your new business a day after resigning.

So please. Heed this advice. If you are making a job change, radio silence for a few months is good on the interwebs. Heck, if there is a chance you will get sued, I think radio silence for the entire litigation is a good idea.

Trust me. People are reading your posts and looking for evidence to use against you.

I do!

For a case that was headed toward trial I found all sorts of yummy stuff on facebook and linked in.
Like stuff a company claimed to be trade secret, was on their Linked In page! YES. Score one for me.

So please - be smart. Use your head. Don't friend or Link to everyone, or post your random thoughts about bosses, employees etc. There is still place for discretion in the world.

NON-SOLICITATION OF CUSTOMERS AGREEMENT UPHELD

2011-01-20T06:09:00.000-05:00

The following reported case comes to us from the Circuit Court of Fairfax County (Virginia).

Daston Corporation developed, sold, and managed Google Apps in accordance with a nationwide license from Google. The individual defendants were the Managing Director and the Technical Director of Daston's Software as a Service Practice. Upon commencing employment with Daston, these defendants/ex-employees signed identical agreements titled Non-Disclosure, Non-Competition/Solictation and Invention Assignment. The individual defendants employment with Daston ended on February 1, 2010, and they became employed by MiCore Solutions, Inc. MiCore provides a range of consulting and information technology services based on Google Apps and software, as well as other services.

Dalston filed suit against the former employees, seeking to enforce the nonsolicitation provision contained in their employment agreements. The employees filed a response arguing the nonsolicitation clause was unenforceable because it was overbroad and vague.

The Nonsolicitation of Customers clause in the Employment Agreement provided as follows:

B. Nonsolicitation of Customers. During the Employment Period, and for a period of two years following the termination of Employee's employment . . . Employee covenants and agrees that Employee will not, directly or indirectly, solicit, invite or by any way, manner or means, attempt to induce any of Daston's Customers to do business with a Competitor. "Customer" means any government agency, commercial entity or individual receiving the Services during Employee's employment with Daston; except that where Daston provided Services only to a specific component of the governmental or commercial entity, "Customer" means the specific component of such entity.

The court upheld the non-solicitation of customers provision finding the nonsolicitation clause was no broader than necessary to meet the employer's legitimate business interest. The clause applied only to a fixed universe of customers, namely those that existed during the employees' term of employment. As part of senior management, it was reasonable to expect defendants to know who those customers were. Further, the nonsolicitation clause applied only to solicitations for services directly competitive with those provided by the employer.

My Take: I think this is a fair decision...the departing employees knew what they signed and the agreement was reasonable and not overly restrictive.

TRIALS... and Tribulations

2011-01-18T11:01:00.000-05:00

I wrote a preachy article this morning on the ups and downs of life. Article can be found here at an outdoor magazine - Blue Ridge Outdoors.

Any how, you may wonder, does my preachy article have anything to do with Non-Compete litigation in Virginia?

Well, strictly speaking, non-compete litigation can lead to a Trial, which my clients will often tell you, is costly, physically and emotionally taxing, and not much fun. So, Non-competes have a great deal to do with trials, and tribulations, literally.

But, the article also relates because non-compete clients usually experience the following roller coaster in litigation:

1. RIGHTEOUS INDIGNATION - how dare they stop me from taking this job and providing for my family. I gave that company my all for years, made them tons of money and this is how they repay me?

2. COURAGE - they can't stop me from pursuing my dream. They are going to have to sue me, take me to court and make the judge do that before I roll over.

3. FEAR - what if the jury sides with them? Do I really have to stop working for 1 year or more? What will I do then?

4. WORRY - I am paying all these attorneys fees and there is no resolution in sight. What do we do now?

5. ANGER AGAIN - if I have to pay these fees, and risk everything, I am not giving them a dime. They can see us in Court!

and the plaintiffs, or business owners in non-compete litigation usually experience the same roller coaster from a different angle:

1. RIGHTEOUS INDIGNATION - how dare they breach our agreement and work for a competitor. I shared everything with that employee and this is how she repays the favor?

2. COURAGE - I won't let her harm my business and break her promise. I am going to sue her, take her to court and make the judge tell her how wrong her actions are.

3. FEAR - what if the jury sides with her? What will my other employees think?
4. WORRY - I am paying all these attorneys fees and there is no resolution in sight. What do we do now?

5. ANGER AGAIN - if I have to pay these fees, and risk everything, I am going to get some money, some recognition for my suffering. They can see us in Court!

Please note. This description does not in any way describe the law. Just the people. And really, non-compete litigation is like a divorce. It is emotional. Personal. Ugly and expensive.

So, if you can hack it, we'll go the distance with you.

If not, I suggest you call me today before you sign that new non-compete agreement or leave your current company.

THAT IS NO TRADE SECRET

2011-01-18T10:34:00.002-05:00

I just read a great case out of Fairfax, Virginia where a company/employer got smacked down in its attempt to sue a former employee! The name of the case is Tryco, Inc. v. U. S. Medical Source.

Tryco is a small business that is authorized to sell medical and dental equipment to the federal government. Brian Thomas worked for Tryco as a customer sales representative. As the on-site employee with the most computer knowledge, he also did some computer maintenance work for Tryco.

In 2007, Jayne Thomas (Brian Thomas's sister-in-law) formed U.S. Medical Source (Medical Source). In 2008, Jayne Thomas, on behalf of MS, applied for and received approval to sell its products to the federal government. Jayne Thomas approached and subsequently hired Brian Thomas. Brian Thomas never disclosed to anyone at Tryco that he was going to work for a direct competitor.

Before leaving Tryco, Brian Thomas was asked to tie up some loose ends and to prepare instructions for the person who was going to be taking over his accounts. He cleaned out his desk and cleared his desktop computer of his personal files by transferring them to a flash drive. He also created at his boss's instruction a document called "How to Quote Lackland" to pass on to his successor. The document included the names of buyers he worked with, their phone numbers, and information on how to mark-up sales. At the request of Tryco, on his last day of work, Brian Thomas sent a farewell email to many of the individuals with whom he had done business. His email announced his departure from Tryco and thanked everyone for all they had done for him. It did not disclose Brian Thomas's new job with Medical Source or provide any new contact information for him. He sent this email from Tryco's company email address, which every Tryco employee has access to.

Guess what happened next? That's right! Brian Thomas was sued by Tryco for misappropriation of trade secrets,breach of fiduciary duty, tortious interference, civil conspiracy, and computer trespass under Virginia law.

I am happy to report that Brian Thomas won the case on all issues. In my opinion, this is just another example of a jilted ex-employer who files a lawsuit against a departing employee to "teach them a lesson." The way Brian Thomas handled his departure from his ex-employer was above board and honest.

I hope the employer learned a lesson.

SEVERANCE --- IS THERE A VIRGINIA LAW ON WHETHER I AM ENTITLED TO SEVERANCE?

2011-01-11T08:58:00.000-05:00

I was asked that question yesterday.

No.

There is no law.

Under Virginia common law (meaning cases) there is no guarantee or right to severance.

In fact, it is like any other contract.

You may be offered, or not.
You may want to sign, or not.

More detailed questions? Check out this article Dan wrote on severance packages in Virginia.

Good luck everyone.. let us know if we can help.

TRUST ME - COURT IS NOT SUNSHINE AND ROSES

2011-01-07T10:33:00.000-05:00

I did divorce work for years. Even did criminal work. I currently split my practice between serious injury cases related to malpractice, and non-compete employment litigation.

Clients appearing before the court on domestic issues and/or facing criminal charges, often anticipate the process will be emotional, difficult and stressful.

But for some reason, our non-compete clients think that taking or defending a non-compete case in Court will just be "business," not personal. They assume because it is work related, it will not have any impact on them personally.

News flash. Court is always emotional, difficult and stressful. Not to mention the attorneys fees which I doubt anyone enjoys paying.

I have had many clients (and spouses of clients) call me in non-compete litigation and tell me how hard it has been on them emotionally. Lawsuits will cause anxiety, stress, you name it.

So what is the solution?

Warn people not to enter into the situation lightly.
Do my best to keep them focused and advise them on possible outcomes so they can position themselves well.
And do my best to make cases end quickly, and favorably for my clients.

That being said.... the best way to avoid all of this stress, is to discuss your agreement, your employment agreement, with someone before you SIGN IT... and or leave your job.

We can't always avoid litigation.... sometimes people will sue no matter what, but hopefully, some advice and planning can save at least a few Virginia employees, the time, money and emotional energy it takes to litigate a case.

Blessings to you all this New Year!

A NEW YEAR FOR EMPLOYMENT LITIGATION - I MEAN, ADVICE TO AVOID LITIGATION

2011-01-04T09:24:00.000-05:00

Sometimes, there is NOTHING you can do to avoid being sued. Seriously.

You can play by the rules. Not breach your non-compete agreement, and your old employer will still run to the Court house and allege you did all of these awful, illegal things. And then, just when you think it can't get worse, this employer will tell the judge he is entitled to MILLIONS of dollars in damages. Really? Millions.

Then there are cases where I can help someone avoid litigation by reviewing their agreements and advising against certain action or advising against certain action. Our goal is to make everyone happy, and not end up on the court house steps.

There is a third type of employer who may try to sue you, but realize it is not worth their time and money in the end to go the distance. Settlement is possible, or often suit is dropped when the evidence does not stack up in their favor.

I like to categorize these three scenarios using fun, descriptive and hyperbolic terms.

Situation 1 (Note: Not THE Situation. I am referring to the term commonly used prior to 2010) -
HUGE FLAMING EGO. The guy who sues no matter what he can prove, and regardless of whether he can prove actual economic damages at the end of the day. Sometimes these egos are flamed by attorneys and sometimes they are actually calmed by attorneys. It all depends!

Situation 2 - OUNCE OF CAUTION. These situations arise when employees do their best to be reasonable, and not breach, and employers appreciate that effort and all ends well, without a lawsuit being filed. This of course is the goal for all employment endings.

Situation 3 - GOOD BUSINESSMAN. I would consider the employer in situation 3 to be a good business man driven by what is best for his or her business, and not ego. What? Yes, when a decision is based on potential outcome rather than revenge, sometimes good decisions are made.

So. You are planning on starting a new business in Virginia this Winter? Maybe your employer is about to lose a huge government contract and you want to stay on board with the project. Maybe you just want to work somewhere where your work is appreciated.

If you have an employment agreement, and are thinking of making a change but staying in the same industry, have that agreement reviewed. We can discuss what you have done, should do, and whether or not we will end up in situation 1, 2 or 3.

Word to the wise. Huge Flaming egos end up in Court. Let us know if we can help you this year and hopefully, help you avoid litigation.

THE 12 DAYS OF EMPLOYMENT LITIGATION

2010-12-22T11:01:00.000-05:00

To start - We want to wish you a Merry Christmas. GREETING HERE.

Now, I want to share my take on the 12 DAYS OF CHRISTMAS aka the 12 DAYS OF EMPLOYMENT LITIGATION

On the first day I quit my job, my ex-employer gave to me:

1. An escort to the parking lot

On the second day I quit my job, my ex-employer gave to me:

2. Two bad snarky looks, and an escort to the parking lot

On the third day I quit my job, my ex-employer gave to me:

3. A 3 sentence cease and desist letter (she found on the Internet), Two bad snarky looks, and an escort to the parking lot

On the fourth day I quit my job, my ex-employer gave to me:

4. A lawsuit alleging breach, a 3 sentence cease and desist, two bad snarky looks and an escort to the parking lot.

On the fifth day I quit my job, my ex employer gave to me:

5. Five count complaint, A lawsuit alleging breach, a 3 sentence cease and desist, two bad snarky looks and an escort to the parking lot.

On the 6th day I quit my job, my ex-employer gave to me:

6. 6 interrogatories, a five count complaint, A lawsuit alleging breach, a 3 sentence cease and desist, two bad snarky looks and an escort to the parking lot

On the 7th day I quit my job, my ex-employer gave to me:
7. 7 affidavits claiming breach, 6 interrogatories, a five count complaint, A lawsuit alleging breach, a 3 sentence cease and desist, two bad snarky looks and an escort to the parking lot

On the 8th day after I quit my job, my ex-employer gave to me:
8. 8 deposition notices, 7 affidavits claiming breach, 6 interrogatories, a five count complaint, A lawsuit alleging breach, a 3 sentence cease and desist, two bad snarky looks and an escort to the parking lot

On the 9th day after I quit my job, my ex-employer gave to me:
9. 9 requests for admission, 8 deposition notices, 7 affidavits claiming breach, 6 interrogatories, a five count complaint, A lawsuit alleging breach, a 3 sentence cease and desist, two bad snarky looks and an escort to the parking lot

On the 10th day after I quit my job, my ex-employer gave to me:
10. 10 page letter to my new boss, 9 requests for admission, 8 deposition notices, 7 affidavits claiming breach, 6 interrogatories, a five count complaint, A lawsuit alleging breach, a 3 sentence cease and desist, two bad snarky looks and an escort to the parking lot

On the 11th day after I quit my job, my ex employer gave to me:
11 days to be in court, a 10 page letter to my new boss, 9 requests for admission, 8 deposition notices, 7 affidavits claiming breach, 6 interrogatories, a five count complaint, A lawsuit alleging breach, a 3 sentence cease and desist, two bad snarky looks and an escort to the parking lot

On the 12th day after I quit my job, my ex-employer gave to me:
12 sentence non-suit because he realized he couldn't prove damages and was sick of paying attorneys fees....
And an escort to the parking lot.

HAPPY HOLIDAYS EVERYONE

HAPPY NEW YEAR LAWSUIT

2010-12-20T14:07:00.000-05:00

Wow. Things are not slowing down here in our office.

Apparently, you nice folks of Virginia, employees and new business owners who have hired employees from other companies, are getting sued left and right. And at Christmas too....

While I am not in a position to make sweeping statements about Virginia corporations and their litigation habits, I do think there is a trend occurring in the Commonwealth.

What trend?

Folks filing lawsuits over non-competes as an attempt to scare other folks into submission.

See, what plaintiff corporations and their lawyers hope is that when you get sued and they allege all this bad stuff, you will either (1) offer them money or (2) stop doing what they don't like. I think very few of these companies are ready and willing to take the case to trial and prove that you breached your agreement, caused damages etc.

What do I mean "ready" to take the case to trial?

Thankfully, a company owner can't just walk up to a Va. judge and say "Judge, he signed this. It says he can't work for X. He works for a company that does X. We win."

It is a much more complicated process. You as a plaintiff have the burden to prove the following in non-compete cases:
1. That the agreement is reasonable - narrowly tailored to protect your legitimate business interest and not overbearing or overbroad.
2. That Smith over there, did actually breach the Agreement.
3. That as a result of his breach, you suffered actual, calculable economic loss.

Now, this is not news to anyone, especially not corporate attorneys that file these lawsuits. Despite the very high burden of proof, lawsuits get filed all the time where plaintiffs can't actually prove damages... because again, I think people secretly hope you will go away or pay up if you are sued.

So moral of the story is, not every lawsuit filed can be successful....but sometimes, people use the judicial process as a bargaining chip and they have every right to file suit if they think they can win.

Call us if you are facing a lawsuit this New Year - and we can help.

CAN YOU BE SUED WITHOUT A NON-COMPETE?

2010-12-15T09:14:00.000-05:00

Someone asked google this the other day, and this fine person ended up on our website.

While I hope they found the correct answer, I believe it is a question worth addressing again, and head on.

CAN YOU BE SUED WITHOUT A NON-COMPETE?
I will assume the googler *(person who typed that question into google) wondered if they could be sued in the employment context, absent a written agreement.

And if my assumption is correct, the answer is YES - you can be sued for many different acts even if you don't have a written employment agreement or non-compete provision.

For example:

1. Breach of Loyalty - Essentially, this occurs when an employee takes business away from their employer, or tries to do so while still employed.

Examples - starting your own competing business.
Perfect example - car salesman that says to customer - "Hey, you don't like what we have on our lot, here is my cell phone number, I run a used car lot on the side."

2. Trade Secret violation - Virginia law (it is even in the code book) says you cannot take or use another's secret, confidential or proprietary information and use it for your own benefit for the benefit of another.
Example - customer lists.
Perfect example - carpet salesman takes his old company's customer list, sends post cards to everyone advertising his new company and a 50% off sale!

3. Conversion - conversion is when you take something that is not yours.
Perfect example - (might also be trade secret) if you take the Cocacola formula and start making a new product called Delish brown cola... if you used their property and took it, that would be conversion.

The list could really go on and on. We have written more about ways you can get sued without a non-compete, here on our website.

The basic truth is this... YES, you could sued even if you did nothing wrong.. but if employer is mad, angry or hurt that you left, they may look for things you did to file suit... and if you really did any of these things, start saving money now, the legal bills are on their way!

ONLINE LEGAL FORMS FOR EMPLOYERS, and WHY I LOVE THEM SO!

2010-12-14T10:39:00.000-05:00

Truth #1: Some people like to cut corners and save a few dollars.

Truth #2: Some of these people will buy legal forms online rather than hire an attorney who actually knows the laws in your state regarding non-compete agreements and non-solicitations.

Truth #3: Even some attorneys can draft agreements that will not be upheld as reasonable by the Courts.

Truth #4: The highlight of my job is proving that a non-compete agreement is (1) overly broad or (2) unreasonable or (3) not narrowly drafted to protect a legitimate business interest, etc..

Truth #5: The other highlight of my job is when employees come to me to review their "binding employment contracts," and they are nothing more than a $7.99 print off from an online form site.

Why is this so much fun?

Just try to draft a contract that holds water in all 50 states - I dare ya! And then sell it online for less than $10... You think this is a guarantee of legal sufficiency?

Just ran across this site - http://www.sbmct.com/legal-forms/category/non-solicitation-agreement
so employers, buy away... and employees when you get a non-compete that looks form like, or there is a website on the bottom, please call me. It really will make my day.

WHAT DO NON-COMPETE CLAUSES AND URBAN MEYER'S RESIGNATION AT UNIVERSITY OF FLORIDA HAVE IN COMMOM? A LOT

2010-12-09T14:24:00.003-05:00

I am a college football fan (long time follower of the Virginia Tech Hokies) and try to keep up to date on the world of college football.

The Big News yesterday was Urban Meyer, the highly successful football coach at the University of Florida, announced his resignation. Myer cited the time demands of the profession and his desire to spend more time with his family...a believable reason for quitting.

What does Coach Meyer's resignation have to do with non-compete contracts? A lot.

One of the possible successors to Meyer is University of Arkansas coach Bobby Petrino...who seems to always be looking for the next best head coaching job. But surely Petrino's contract with Arkansas contains a non-compete clause which would prevent him from leaving the Razorbacks and coaching another team in the South Eastern Conference (SEC). Surely Arkansas had smart people drafting Petrino's employment agreement which protected Arkansas from the embarrassment of losing their coach to a rival in their own conference.

Surely these precautions were taken...but unconfirmed reports from ESPN make it look like Arkansas "dropped the ball" on this one. Yes, it appears Coach Petrino has a non-compete clause in his contract BUT the clause only prohibits him from taking a job with a SEC West Division team but leaves him free to take a job with a SEC East Division team (like Florida, Georgia, Tennessee, etc.). What a mistake!

In football parlance, if Petrino leaves for Florida, most commentators will call this a huge FUMBLE by those in charge at the University of Arkansas!

WALMART AND CVS IN LEGAL FIGHT OVER NON-COMPETE

2010-12-07T06:46:00.000-05:00

This fight will be fun to watch.

Walmart Stores Inc., the world’s largest retailer, sued CVS Caremark Corp. (CVS) to stop the drugstore chain from hiring its ex-executive vice president, Hank Mullany, and a judge temporarily barred him from joining the company.

Walmart is alleging in a lawsuit filed in Delaware that CVS’s hiring of Mullany, 52, former president of Walmart’s northern U.S. division, would violate a non-compete agreement. The judge assigned to hear the case promptly issued an order blocking Mullany from taking his new post until after a December 15 court hearing.

Mullany, hired by Walmart in 2006, oversaw operations at 587 Walmart stores in 13 states including Pennsylvania, Virginia, New Jersey and New York, according to the suit. He was “privy” to Walmart’s national strategies and responsible for implementing those strategies in the northeastern U.S.

Walmart claims “Mullany’s employment with CVS will necessarily require Mullany to use and disclose Walmart’s confidential information.” “Knowledge of Walmart’s confidential information would be extremely valuable to CVS and will be used by CVS to gain competitive advantage.”

Walmart's complaints sound like an "inevitable disclosure" argument to me. In other words, even if Walmart cannot prove it, it is "inevitable" that Mullany will unfairly use information he gained while employed at Walmart to the advantage of CVS and the detriment of Walmart.

My Take: I think Walmart's argument is "HOGWASH" and am thankful the Commonwealth of Virginia, to my knowledge, has never accepted the "inevitable disclosure" argument.