Enforcing Non-Compete and Non-Solicitation Provisions in Virginia: Three Recent Takeaways From a Virginia Trial Court

In reaching this conclusion, the Court stated that it is “almost unconscionable” to prohibit a person from seeking employment where the employer did not have work for the contractor and did not offer to subsidize the contractor’s livelihood. In addition, the Court noted that “[t]he purpose of the restrictive covenants was to ensure that for so long as the Army thought the services were valuable that The Metis Group [would be] the only contractor able to provide such services.”[12]  In conclusion, the Court stated that while every company would “happily enjoy the economic benefit of being a sole source contractor. . . An interest in having monopolistic control over possible profits is not a factor that supports a restrictive covenant.”[13]

Bottom Line

The Metis decision is instructive in three key ways.

1. Employers enforcing restrictive covenants have an opportunity (and obligation) to factually establish that the contested restrictions are no broader than necessary to protect their legitimate business interests; and that defendants seeking to invalidate the covenants and dismiss the claims early in the litigation are advised to do so through plea in bar. In addition, the allocation of the burden of proof at the plea in bar stage makes it more likely that restrictive covenants will be robustly litigated in an evidentiary hearing prior to trial.

2. Employers drafting and seeking to enforce non-solicitation of employee covenants in Virginia should consider limiting the restriction on recruitment to performance of competitive services, in addition to limiting the restricted employees to those with whom the person works or about whom they have material knowledge.

3. Employers should be aware that, post- Metis, courts may now focus more significantly and more broadly on the public policy prong of enforceability. For instance, in addition to monopolistic behavior being the subject of public policy analysis, defendants might assert other public policy bases to claim unenforceability – such as pay equity or #MeToo.

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