REFORMATTED anti-competition FINAL sm

Elements of Claim

A covenant not to compete is enforceable, though the courts  will interpret it narrowly and strictly. A court will restrain an  employee from working so long as the employer proves that:

1. The employer has a protectable interest in certain business  activity (definition);

2. The geographic restraint of competition is reasonable  (definition);

3. Time period of the restraint is reasonable (definition); and,

4. The absence of an undue hardship on the employee  (definition), and

5. The employer paid good and valuable consideration for the  non-compete clause (definition).

6. Most importantly, the court will balance or weigh the employer’s protectable interest versus burden of enforcement  on the employee/former employee.

Covenants in restraint of business activity are not favored, will  be strictly construed, and in the event of an ambiguity, will be  construed in favor of the worker. Richardson v. Paxton Co., 203  Va. 790, 795, 127 S.E.2d 113, 117 (1962). It is the employer’s  burden to prove that the restraint sought is no greater than  necessary to protect a legitimate business interest, is not  unduly harsh or oppressive in curtailing an employee’s ability to  earn a livelihood, and is reasonable in light of sound public  policy. Roanoke Engineering Sales Co., Inc. v. Rosenbaum, 223  Va.548, 552, 290 S.E.2d 882, 884 (1982).

 

Reasonable Restraints. 

If a restrictive covenant is supported by sufficient consideration  and is ancillary to an employment agreement, a worker’s   agreement not to compete against her employer upon leaving  employment will be upheld if the restraint is reasonable in terms  of length of time and geographic scope as to not create an  undue hardship on the employee.  Concord Orthopaedics  Professional Association v. Forbes, 142 N.H. 440, 444-45; 702  A.2d 1273 (1997); Smith, Batchelder & Rugg v. Foster, 119 N.H.  679, 406 A.2d 1310, 1312 (1979); Becker v. Bailey, 268 Md. 93,  299 A.2d 835, 838 (1973); Knoebel Mercantile Co. v. Siders, 165  Colo. 393, 439 P.2d 355, 358 (1968).

 

Restatement (Second) of Contracts

Section 186 of the RESTATEMENT (SECOND) OF CONTRACTS  provides that a promise is unenforceable on the grounds of  public policy if it is unreasonably in restraint of trade. A promise  is in restraint of trade if its performance would restrict the  promissor in the exercise of a gainful occupation. Such promises  are unreasonable if they are greater than needed to protect the  employer’s interests or the employer’s need is outweighed by  the hardship to the employee or the likely injury to the public.  RESTATEMENT § 188. See Ellis v. James V. Hurson, 565 A.2d  615, 618 (D.C. 1989).

 

Free Consultation.

We offer a free consultation regarding all issues surrounding a  non-compete.

 

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