As we previously discussed here, the Virginia legislature was considering a bill earlier this year that would limit the use of non-compete agreements with certain categories of employees. Earlier this month, Virginia’s governor signed a series of new employment laws including one that bans using covenants not to compete with “low-wage” employees. The law takes effect July 1, 2020, but does not apply retroactively.
The new law provides that “[n]o employer shall enter into, enforce, or threaten to enforce a covenant not to compete with any low-wage employee.” It defines a “covenant not to compete” as “a covenant or agreement, including a provision of a contract of employment, between an employer and employee that restrains, prohibits, or otherwise restricts an individual’s ability, following the termination of the individual’s employment, to compete with his former employer.” Importantly, the statute clarifies that non-compete agreements “shall not restrict an employee from providing a service to a customer or client of the employer if the employee does not initiate contact with or solicit the customer or client.”
The law also defines the term “low-wage employee” as “an employee whose average weekly earnings . . . are less than the average weekly wage of the Commonwealth[.]” Included in the definition of low-wage employees are “interns, students, apprentices, or trainees employed, with or without pay, at a trade or occupation in order to gain work or educational experience.” The law also considers independent contractors to be low-wage employees if they are paid “an hourly rate that is less than the median hourly wage for the Commonwealth for all occupations as reported, for the preceding year, by the Bureau of Labor Statistics of the U.S. Department of Labor.”
The law creates a private cause of action for low-wage employees to assert “against any former employer or other person that attempts to enforce a covenant not to compete against such employee in violation of this section.” In such an action, the law provides for a number of possible remedies including voiding the non-compete agreement, enjoining certain conduct, ordering payment of liquidated damages, and awarding lost compensation, damages, and reasonable attorney and expert fees and costs. Employers who violate the law can also be subject to civil penalties of $10,000 per violation.
Finally, the law requires employers to post a copy of the law, or a government-approved summary of the law, in the same location where other legally mandated employment notices are required to be posted. Failing to do so could result in a civil penalty ranging from a written warning for a first violation, to a $250 penalty for a second violation, up to a penalty of $1,000 for a third and each subsequent violation.
Whether you are a business owner who is, or is considering, asking your employees to sign a non-compete agreement or an employee being asked to sign one, it is always advisable to seek the assistance of an attorney experienced in restrictive covenant and non-compete law. The Western Springs and Oak Brook non-compete agreement attorneys at Lubin Austermuehle are among the best non-compete attorneys in the Chicagoland area with over thirty years of experience defending and prosecuting non-compete agreements and unpaid wages and a wide variety of other business dispute lawsuits. Lubin Austermuehle, a firm of Chicago business dispute attorneys, handles litigation for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat.
Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois commercial dispute trial lawyers have more than three decades of experience litigating complex non-compete agreement, non-solicitation agreement, class-action, trade secret, and libel suits. Our DuPage county business dispute and restrictive covenant lawyers also handle emergency non-compete litigation involving temporary restraining orders and preliminary injunctions. We also assist Chicago, Cook, and DuPage County area businesses and business owners who are victims of fraud. You can contact us by calling (630) 333-0333. You can also contact us online here.