The services of employees are crucial for companies’ success. However, every new employee added to the staff roster is potentially a source of liability. Companies have vicarious liability in scenarios where workers make negligent mistakes. Organizations are also typically responsible for the misconduct of employees, such as when one worker sexually harasses another. Generally speaking, employment contracts and training materials help mitigate liability associated with hiring new professionals.
The possibility of an employee competing against their employer using what they learned or the relationships they built during their tenure at the company is another concern. Particularly when professionals have access to trade secrets or play an important role in the development of new products, their knowledge about the company could prove damaging when they move on from their current position.
Noncompete agreements help protect employers from unfair worker competition. Ensuring that restrictive covenants actually protect a company and are enforceable under current statutes is of the utmost importance when negotiating and signing employment contracts.
Virginia limits noncompete agreements
Despite recent efforts to ban non-compete agreements at the federal level, they remain lawful and valuable employment contract inclusions. Businesses in Virginia can still require that employees sign noncompete agreements, provided that the employee receives something of valuable consideration in exchange. Typically, the job offer is what they receive in exchange for giving up the ability to directly compete against the company.
In addition to providing something of value, the company has to ensure that the agreement includes appropriate restrictions on enforcement. Typically, overly-broad noncompetes are difficult to enforce. Limiting how long the agreement applies and the geographic area in which it is enforceable can help ensure the document holds up under scrutiny in civil court.
Worker pay is also an important factor to consider. Noncompetes also require that workers earn competitive salaries. Low-wage workers should not be subject to noncompete agreements. According to Virginia statutes, an employee should earn at least $1,463.10 per week or $76,081 annually before a noncompete agreement is an option.
Finally, employers generally need to be proactive about monitoring competitive activities when high-ranking employees leave their positions. Enforcement typically requires litigation or at least the delivery of a cease-and-desist letter to a former employee engaging in infringing activities.
Establishing viable and enforceable noncompete agreements often requires careful preparation on a case-by-case basis. Companies with thorough employment contracts have less risk when adding to their staff rosters.
