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Banning Noncompetes in Virginia

 

The past decade has seen a nationwide wave of reform in noncompete law, specifically the limitation of noncompete agreements. Since 2016, ten states—including Virginia in 2020— banned the use of noncompete agreements against certain “lowwage” employees. In order to stay ahead of this curve and ensure Virginia remains and grows as one of the top states to do business, this Article suggests that Virginia—like its neighbor, the District of Columbia, initially did in 2021—pass a complete ban of all noncompete agreements in the employment context. Such a ban would make Virginia a lucrative destination for entrepreneurs and startups by maximizing the job and employee market and keeping the best business opportunities for employers and employees alike in-state. The Article forecasts this effect by examining the rise of California’s Silicon Valley, where employee noncompete agreements are banned, and the converse decline of innovation in Michigan since 1985, when the state accidentally repealed its noncompete ban. Virginia would specifically benefit from a ban of employee noncompetes because its current noncompete law is inadequate. This Article argues that Virginia courts’ longstanding three-prong test weighing legitimate business interest, undue hardship, and public policy is dangerously unpredictable—so much so that the Supreme Court of Virginia once upheld and struck down the exact same noncompete agreement in two different cases—resulting in legal guesswork and unfair bargaining power between employer and employee. This Article also suggests that Virginia’s 2020 “low wage” ban insufficiently addresses the issues at hand and even further adds to the burden of deciphering the law. While some may claim employee noncompete agreements are necessary to protect legitimate business interests and advance the freedom of contract, this Article responds that such business interests are already adequately protected by other, less problematic provisions—namely, confidentiality and nonsolicitation agreements—and that the freedom of contract is not any less valuable than the freedom of trade, which employee noncompete agreements severely restrain. Finally, this Article proposes model legislation to aid the Virginia General Assembly, and other jurisdictions who may follow suit, in passing such a ban.

Christopher J. Sullivan *

Justin A. Ritter **

*Associate, Ritter Law PLLC, Charlottesville, Virginia. J.D., 2022, University of Richmond School of Law. Editor-in-Chief, University of Richmond Law Review, Volume 56.

**Founder, Ritter Law PLLC, Charlottesville, Virginia. J.D., 2011, Penn State Dickinson Law.

 

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