SECURITY AND THE LAW
A question that frequently confronts business owners is the effect of a covenant not-to-compete. In the Supreme Court of Virginia, the plaintiff, a highly specialized employment agency that provided a variety of security services to government and private-sector customers, prevailed in its bid to provide staffing for a government agency. Staffing for the particular project required that the person have a “top secret†security clearance for a government agency referred to as “SGC.â€
At the time the plaintiff won the bid, the employee was working with another company. She subsequently signed a one-year employment agreement with the plaintiff that contained a non-competition provision.
The employee worked for the plaintiff handling general administrative security support, monitoring, alarms and intrusion detection systems at the government’s overt location. Several months later, the employee was offered a position at another company as an administrative assistant for the SGC at a covert location.
The employer sued, among others, the new employer that the employee went to work for, claiming that the corporation interfered with the employment contract of one of its employees and had engaged in a conspiracy to injure the former employer’s business in violation of the Virginia codes.
Following a hearing, the trial court struck the former employer’s evidence, concluding that the non-compete provision of the former employee’s employment agreement was overbroad. The former employer appealed.
The appellate court found that the restriction was not limited to positions competitive with the former employer. Under the provisions at issue, the former employee was prohibited from performing any services for any other employer in a position supporting the former employer’s customer.
This provision precluded the former employee from working for any business that provided support of any kind to the customer, not only security staffing businesses that were in competition with the former employer. As the prohibition was not limited to employment that was in competition with the former employer, the court found that the covenant was overbroad and unenforceable.
The court pointed out that a non-competition agreement between an employer and an employee will be enforced if the contract is narrowly drawn to protect the employer’s legitimate business interest, is not unduly burdensome on the employee’s ability to earn a living and is not against public policy.
The court did point out that each non-competition agreement must be evaluated on its own merits, balancing the provisions of the contract with the circumstances of the businesses and employees involved.
It should be noted that there was a fairly lengthy dissent in the matter and that various states have different rules and decisions involving covenants not-to-compete.
At the time the plaintiff won the bid, the employee was working with another company. She subsequently signed a one-year employment agreement with the plaintiff that contained a non-competition provision.
The employee worked for the plaintiff handling general administrative security support, monitoring, alarms and intrusion detection systems at the government’s overt location. Several months later, the employee was offered a position at another company as an administrative assistant for the SGC at a covert location.
The employer sued, among others, the new employer that the employee went to work for, claiming that the corporation interfered with the employment contract of one of its employees and had engaged in a conspiracy to injure the former employer’s business in violation of the Virginia codes.
Following a hearing, the trial court struck the former employer’s evidence, concluding that the non-compete provision of the former employee’s employment agreement was overbroad. The former employer appealed.
The appellate court found that the restriction was not limited to positions competitive with the former employer. Under the provisions at issue, the former employee was prohibited from performing any services for any other employer in a position supporting the former employer’s customer.
This provision precluded the former employee from working for any business that provided support of any kind to the customer, not only security staffing businesses that were in competition with the former employer. As the prohibition was not limited to employment that was in competition with the former employer, the court found that the covenant was overbroad and unenforceable.
The court pointed out that a non-competition agreement between an employer and an employee will be enforced if the contract is narrowly drawn to protect the employer’s legitimate business interest, is not unduly burdensome on the employee’s ability to earn a living and is not against public policy.
The court did point out that each non-competition agreement must be evaluated on its own merits, balancing the provisions of the contract with the circumstances of the businesses and employees involved.
It should be noted that there was a fairly lengthy dissent in the matter and that various states have different rules and decisions involving covenants not-to-compete.
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