Non-compete/non-disclosure agreements

Small business owners often want to protect themselves by obtaining non-competition agreements from their employees. However, this is an area of the law which has undergone a great deal of change in Virginia in recent years. There is a great deal of tension between a business’s right to protect itself against competition from an ex-employee, and an employee’s right to work.

Perhaps the biggest problem is that if a Virginia court decides that part of a non-competition agreement is not enforceable, the entire agreement is generally unenforceable. Thus, if a Woodbridge business which operated only in Northern Virginia had its employees sign an agreement not to compete anywhere in the United States, a Virginia court would probably not enforce the agreement based on it covering too large an area, even if what the employee actually did was to compete in Woodbridge, Virginia. Similarly, if an agreement prohibited an employee from competing for thirty years, a court would probably find that the agreement was not enforceable based on it lasting too long, even if what the employee did was to quit work and begin competing immediately.

Thus, it is very important that these agreements be very carefully drafted or they may provide no protection at all.

Many small business owners should consider protecting their businesses with non-disclosure agreements. While the Virginia Uniform Trade Secrets Act provides businesses with some protection against disclosure of a business’s trade secrets, a small business owner may be better served by using carefully drafted non-disclosure agreements with their employees and with vendors.