Enforcing Non-Compete and Non-Solicitation Provisions in Virginia: Three Recent Takeaways From a Virginia Trial Court
The Court deemed the covenants facially invalid, and further determined that they violated public policy by attempting to “hoard” employees and use the covenants for “monopolistic” purposes. In reaching these decisions, the Court shed a good deal of light on (1) the evolving procedural and evidentiary requirements for an early determination of enforceability in Virginia; (2) the current permissible scope of restrictive covenants in Virginia; and (3) a potentially expanded view of the public policy considerations regarding enforceability.
This ruling provides important direction for employers, whether they are seeking to implement, enforce or invalidate non-compete agreements in the Commonwealth.
Background of the Recent Circuit Court Case
The Metis Group (Metis) sued two former independent contractors and the company with whom they were newly affiliated, Preting LLC (Preting).[1] The former contractors were doctors who had performed psychological services for the United States Army on a task order for Metis under a Blanket Purchase Agreement issued by the United States Government (BPA). The contractors each signed Independent Contractor Agreements with Metis that contained restrictive covenants (the Agreements). The covenants prohibited them from engaging in any professional services with the United States Army anywhere in the world and for any purpose, as well as from soliciting Metis employees or contractors.
Specifically, as to the non-compete, the doctors agreed not to “directly or indirectly, solicit, attempt to solicit, engage, contact, provide any professional psychological services for Client [defined as the United States Army].” [2]
Specifically, as to the employee non-solicit provision, the doctors agreed not to:
(i) induce . . . any employee or contractor to terminate any employment or any contractual relationship with Metis and/or any Client; (ii) interfere with . . . Metis’ and/or any Client’s relationship with any other Metis and /or client employee or contractor; (iii) solicit, . . . employ or engage any employee or contractor employed or engaged by Metis and/or any Client with whom Metis and/or Client has a contractual relationship: or (iv) advise or recommend to a third party that it employ, . . . engage, or solicit for employment or independent contractor relationship, any person employed or engaged as an independent contractor by Metis and/or its Clients.[3]