Main Menu

Virginia Court Enforces Narrowly Drawn Restrictive Covenants

Restrictive covenants  in employment agreements are often hotly contested, and can be difficult for employers to enforce. The Circuit Court of Fairfax County recently addressed the complexities of these agreements in ruling that a non-solicitation and non–disclosure agreement was enforceable, while a non-competition provision was not. Omnisec International Investigations, Inc., et. al. v. Slavica Stone, et. al., CL 2018-6368 (March 26,2019).

Under Virginia law, an employer seeking to enforce a restrictive covenant must show that the “restraint is no greater than necessary to protect a legitimate business interest, is not unduly harsh or oppressive in curtailing an employee’s ability to earn a livelihood, and is reasonable in light of sound public policy.”  Assurance Data Inc., v. Malyevac, 286 Va. 137 (2013).

The Omnisec case arose  out of Defendant Stone’s 2017 resignation from Omnisec to work for a competitor, CSRA. Both Omnisec and CSRA provide background checks for the federal government. Before resigning from Omnisec, Stone emailed various Omniplex documents to her personal email account.

Plaintiffs filed suit against Stone and CSRA, and Defendants responded by filing a plea in bar challenging the enforceability of  the restrictive covenant portions of Stone’s Employment Agreement with Omnisec.

In pertinent part, the Employment Agreement provided: 

Non-Solicitation of Employees. Employee hereby covenants and agrees that, during Employee’s employment with OMNIPLEX and for a period of one (1) year immediately following the termination of such employment, whether voluntary or involuntary, Employee agrees not to (1) induce, solicit, request, recruit or aid any employee of OMNIPLEX, to leave OMNIPLEX to work for any other employer, including but not limited to, competitors of OMNIPLEX and current or former customers or clients of OMNIPLEX; (2) employ or attempt to employ in any capacity any of OMNIPLEX ‘s employees; or (3) in any other manner for any reason induce any of OMNIPLEX’s employees to leave his/her employment.

Non-Solicitation of Customers/Clients. Employee hereby covenants and agrees that, during Employee’ s employment with OMNIPLEX and for a period of one (1) year immediately following the termination of such employment, whether voluntary or involuntary, Employee will not, directly or indirectly, in competition with OMNIPLEX, whether on Employee’s own behalf or on behalf of any other person or entity, solicit business from or conduct business with any Restricted Entity, as defined below; or attempt or seek to cause any Restricted Entity to refrain from doing business with OMNIPLEX. For purposes of this paragraph, a “Restricted Entity” is any customer or client or potential customer or client of OMNIPLEX that Employee solicited, called upon, conducted business with, became aware of, or identified as a potential customer or client of OMNIPLEX, during Employee ‘s employment by OMNIPLEX.

Non-Disclosure. Employee agrees that during Employee’s employment with OMNIPLEX and thereafter, Employee will not use, disclose or transfer directly or indirectly any OMNIPLEX Confidential Information or Third Party Information other than as authorized by OMNIPLEX, nor will Employee accept any employment or other professional engagement that likely will result in the use or disclosure, even if inadvertent, of OMNIPLEX Confidential information or Third Party Information. Employee agrees that he will not use in any way other than in furtherance of OMNIPLEX’s business any OMNIPLEX Confidential Information or Third Party Information.

The Agreement defines confidential information as “any and all confidential and/or proprietary information of OMNIPLEX.

The Circuit Court of Fairfax County sustained in part and overruled in part the plea in bar. Specifically, the Court ruled:

  • The non-solicitation of employees provision was narrowly drawn to protect Omnisec’s legitimate interests because it did not restrict a departed employee’s right to secure gainful employment;
  • Despite the fact that there was no time limitation on the non-disclosure agreement, the portion prohibiting disclosure of Omnisec data was enforceable because it was limited to “confidential and proprietary information;”
  • The portion of the non-disclosure clause prohibiting employment in any position that “likely will result in the use or disclosure, even if inadvertent, of OMNIPLEX Confidential information” is unenforceable because an employee could not know what future employment  might require disclosure of confidential information; and
  • The non-solicitation of customers clause was enforceable because it was limited to those customers that Stone actually solicited or serviced while employed by Omnisec (approximately nine entities met the definition of “Restricted Entities”).

Because the Agreement included a severability clause, the Court severed the unenforceable non-competition clause and found the remaining portions of the Restrictive Covenants to be enforceable.

The Omnisec decision is an excellent illustration of the importance of using narrowly crafted restrictive covenant agreements to protect an employer’s legitimate business interests. A court is far more willing to enforce an agreement when it does not preclude an employee from securing new employment in the same field or prohibit the solicitation of clients with whom the employee had no relationship nor access to proprietary information.  Additionally, the Court’s decision is a reminder of the need for a severability clause in restrictive covenant agreements, as it allowed the Court to make the agreement enforceable by striking the offensive non-compete provision.

No comments yet.

Leave a Reply