Are There Ways to Get Out of Noncompete Agreements?

Noncompete agreements are big business. The Federal Trade Commission (FTC) estimates that 18% of Americans — roughly 30 million people — are covered by them. While the FTC’s effort to ban most noncompete agreements is currently on hold due to being tied up in litigation, several states have continued to crack down on them. That includes Virginia, which recently expanded its ban on noncompete agreements to include all employees who are eligible to receive overtime pay for hours worked in excess of 40 per week. But what if you don’t fall into that category? Is there any way to get out of a noncompete agreement? There may be, as our Richmond noncompete lawyers explain below.

Virginia Noncompete Agreements 101

Noncompete agreements are employment contracts that prevent former employees from working for their former employers’ competitors for a period of time after their employment ends (whether they were terminated or left voluntarily). They generally are enforceable in Virginia provided that (1) they are “reasonable” and (2) the employee against whom enforcement is sought is not statutorily exempt under Virginia’s employment laws. Some factors the courts consider when making the reasonableness determination include:

Whether the time and geographic scope of the limitations placed on the worker are reasonable
Whether the agreement unduly burdens the employee’s ability to find a job and earn a living
Whether the restrictions are no greater than necessary to protect a legitimate business interest
Whether the agreement violates a mandate of Virginia public policy

If there is ambiguity in the agreement, courts generally resolve it in favor of the employee. For more information about the enforceability of noncompete agreements in Virginia, please speak to a Richmond noncompete lawyer.

How to Get Out of a Noncompete Agreement

Employees who are subject to noncompete agreements have several avenues for attempting to get out of them; however, the effectiveness of each of the methods below depends a great deal on the facts of the case.

Show Unreasonableness

As mentioned above, “reasonableness” is not an objective criterion. The reasonableness of a particular noncompete agreement depends on many factors, including the industry, the region, the employee’s job duties, the employee’s access to sensitive information, and whether the employee received specialized training, among others. However, showing that one or more provisions of the noncompete agreement are unreasonable is an effective way to circumvent it. Our Richmond noncompete lawyers would be happy to review your noncompete agreement to determine whether any of its provisions could fairly be found to be unreasonable.

Show Lack of Legitimate Business Interest

In addition to being reasonable in scope, the noncompete agreement must be narrowly drawn to protect a legitimate business interest of the employer. There is no bright line rule on what constitutes a “legitimate business interest.” However, there are certain categories of interests that are generally considered to be valuable enough to be protectable via noncompete agreements. Those interests are:

Trade secrets and other proprietary information
Customer and prospective customer lists
Customer relationships
Customer information
Research and development plans
Sales and marketing plans
Specialized employee training

Noncompete agreements should not be used to prevent employees from competing based on their general knowledge or skills alone; as such, they are less likely to be found to be enforceable against employees who do not have access to any of the above information.

Show Non-Competitive Activity at New Employer

Noncompete agreements are intended to prevent competition. Therefore, one way to get out of a noncompete agreement is to show that you are not competing with your former employer in your new role. You could do this, for example, by showing that your new job is in a different industry, that it’s in a distant location, that it serves a different customer base, or that you are performing an entirely different job function.

Offer to Help With Transition

Besides just preventing former employees from competing, noncompete agreements also have the effect of discouraging employees from leaving in the first place. This effect is particularly potent for executives and other key team members, as employers often fear losing the employees in those roles suddenly. To assuage your former employer’s fears, offer to remain in your role for a limited transition period to train your replacement in exchange for being released from the noncompete. You could also offer to sign a non-solicitation agreement (i.e., a promise not to poach the employer’s customers) in lieu of a full-blown noncompete agreement. If you’re in a position to negotiate with your former (or soon-to-be-former) employer, a Richmond noncompete lawyer can help you secure the most favorable terms possible.

Show Breach by Employer

Employees are not the only parties who are capable of breaching noncompete agreements. A breach by the employer can render the agreement unenforceable. You could show that your former employer breached the agreement by showing that you were terminated wrongfully (e.g., as a result of unlawful discrimination or retaliation) or that you are owed unpaid wages.

Buy Out the Agreement

Everything is negotiable, including noncompete agreements. While the buy-out option may not be available for everyone, it can be a highly effective strategy to get out of a noncompete agreement. Many employers are willing to release their former employees from noncompete agreements in exchange for financial compensation. In some cases, the new employer may be willing to buy out the agreement on behalf of the employee. The amount of the buyout will vary based on the employee’s salary, the duration of the noncompete agreement, and how much the former employer could stand to lose if exposed to competition.

Discuss Your Situation With a Richmond Noncompete Lawyer

The enforceability of noncompete agreements is highly fact-specific. Accordingly, the only way to know your chances of successfully getting out of your noncompete agreement is to have an experienced attorney review it. For more information, please contact a Richmond noncompete lawyer at Pierce / Jewett by calling 804-502-2320 or using our online contact form.