Bad Economic Times and Noncompetes

Dan Frith

Contributor

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Everyday the morning newspaper provides depressing news on the deepening economic problems in the U.S. First it was Wall Street...followed by the Banking Industry...then the Auto Industry...followed by regional then local businesses. The end result is that a lot of Americans are going to get the "pink slip" for Christmas or New Years!

To add salt to the wound, many employees are losing their jobs and, on the way out of the door, their employer is reminding them of the noncompete agreement they signed 6 years previous which prevents the employee from working in their chosen field within a 100 mile radius for 2 years. Outrageous - you better believe it! Legal and enforceable - maybe not.

Employees faced with unfair noncompete and nonsolicitation contracts need legal advice. Each state has different requirements for the enforceability of these restrictive agreements. Some noncompetes are illegal because they last too long or prohibit competition in too large of a geographical area. Often, employers have already breached the employment agreement(by failing to pay earned bonuses, etc.) before the employee leaves the company providing what is called the "first breach defense." Sometimes, the noncompete would prevent a departing employee from working for a competitor even as a custodian ("the janitor test") and these contracts are rarely deemed to be enforceable.

My Take: If you have signed a noncompete or nonsolicitation agreement with your employer, consult with a knowledgeable attorney about your rights and responsibilities. My firm only represents employees in these types of disputes and we write about those issues in our blog: Virginia Non-Compete Law Blog.