Non-Competition Agreements – Are Your Company's Agreements Enforceable?
Thursday, May 10, 2007
A Member article by Coalition Exchange Member Merritt Green, Principal of General Counsel, P.C.
Agreements provide a valuable tool for employers to protect their most
important asset – their business relationships with clients. However,
because non-competition agreements limit the ability of an employee to
obtain subsequent employment, courts require that they be narrowly
tailored to protect the legitimate business interests of the employer.
If they are too broad, they will not be enforceable.
recent decision by the Virginia Supreme Court, Omniplex World Services
Corp. v. U.S. Investigations Services Inc., 270 Va. 246 (Va. Sept. 16,
2005), emphasizes the importance of narrowly-tailored non-competition
agreements. In this case, Omniplex provided “top secret”
security-cleared staffing to a “Sensitive Government Customer.”
Omniplex’s non-competition agreement provided, in relevant part, that
hereby covenants and agrees that, . . . following any termination of
employment from Omniplex . . . Employee shall not . . . (1) accept
employment, become employed by, or perform any services for Omniplex’s
Customer for whom Employee provided services or for any other
employment in a position supporting Omniplex’s Customer, if the
employment or engagement requires Employee to possess the same level of
security clearance Employee relied on during his employment with
Omniplex. . . .
employee at issue in this case provided “general administrative
security support, monitoring alarms and intrusion detection systems” at
the government agencies’ headquarters. After a few months of employment
with Omniplex, the employee received a job offer with another staffing
company as an administrative assistant for the “Sensitive Government
Customer.” After the employee commenced work with the new employer,
Omniplex filed litigation against the employee for breach of contract
and the new employer for tortious interference with contract and civil
conspiracy, seeking $1,350,000 in damages and injunctive relief.
Virginia Supreme Court affirmed the decision of the Fairfax Circuit
Court that the non-competition agreement was overbroad and, thus,
unenforceable. The Court stated that “[t]his provision precludes
[employee] from working for any business that provides support of any
kind to the [Sensitive Government Customer], not only security staffing
businesses that were in competition with Omniplex.” Omniplex, 270 Va.
at 250. “Thus, for example, the non-competition agreement precludes
[employee] form working as a delivery person for a vendor which
delivers materials to the [Sensitive Government Customer] if such
security clearance was required to enter [secured] installation even
though the vendor was not a staffing service competing with Omniplex.”
Id. Accordingly, because Omniplex’s non-competition agreement was not
limited to employment that would be in competition with Omniplex, the
Virginia Supreme Court ruled that it was overbroad and not enforceable.
what does this mean for employers? Take the time to review your
non-competition agreements (or have an attorney review the agreement).
Often times, the instinct for an employer is to have the
non-competition agreement as broad as possible to provide protection
for their business and keep a former employee from competing. This
instinct, however, will result in the non-competition agreements being
unenforceable. Therefore, when reviewing your company’s non-competition
agreement, ask yourself the following questions: (1) what is our
business; (2) who are our customers; and (3) how can a non-competition
agreement be narrowly tailored to protect our business and customer
If your company ensures that its non-competition
agreement is carefully (and narrowly) tailored solely to protect its
vital business interests (and no more), it should be enforceable.
About Merrit Green, General Counsel, P.C. Founded
by Merritt Green in 2004, General Counsel, P.C. was established to
satisfy the legal needs of businesses in Virginia, Maryland and
Washington, D.C. Striving to be the “legal partner and trusted advisor”
of our clients, our representation can be divided into four primary
categories: business/corporate law; labor/employment law; state/federal
court litigation; and estate/business succession planning. For
additional information on General Counsel, P.C., please visit our
or email: email@example.com. General Counsel, P.C. serves as
corporate counsel for The American Small Business Coalition.