What Happens If You Break a Non-Compete
What Happens If You Break a Non-Compete?
Consider the following situation.
You signed a non-compete agreement when you joined the company. It was a several page contract filled with legalese in a stack of documents handed to you on your first day of work by the human resources department. Maybe someone told you, “This is standard,” as you signed it. After all, it never came up during your interview.
You thought, the non-compete must be like the employee handbook or the tax forms. Everyone signs it, no one reads it, and the company doesn’t really enforce it, right?
Not so fast. Virginia companies are increasingly suing former employees who signed non-compete contracts and joined a competitor. Leaving many employees to wonder, what happens if you break a non-compete?
Three Scenarios If You Break a Non-Compete
There are three potential outcomes if you break a non-compete.
Outcome #1 – The company does nothing. You signed the non-compete, quit your job, and joined a competitor across town. Technically, you’re violating your non-compete. But for various reasons, the company has decided not to enforce the terms of the contract.
Why would a company neglect to enforce a non-compete? Perhaps you left on good terms, and your book of business is staying at your ex-employer. Companies generally don’t sue former employees – and Virginia law does not really tolerate lawsuits against former employees over non-compete contracts – unless you are causing some measure of economic harm to the company. But if you are merely working for a competitor, without causing the company’s customers to flee en masse, it is unlikely that you are going to get sued.
Outcome #2 – The company negotiates a release. In this scenario, the company has likely sent you a cease and desist letter threatening to sue you. The letter says something to the effect of, “Stop working for our competitor, or else.” It arrives via certified mail at your home, and your new employer receives a carbon copy.
So what happens if you break a non-compete and get a cease and desist letter? First, do not ignore the letter. More often than not, companies will negotiate a release from your non-compete in exchange for compensation or some other consideration. The threat to sue is puffery. But if you ignore the letter, you risk getting sued for willful breach of the non-compete because your ex-employer will contend that you acted despite notice of breach. Therefore, if you get a cease and desist letter for a non-compete in Virginia, contact an attorney right away.
Repeat: if you get a cease and desist from your ex-employer about a non-compete contract, do not hesitate to call a lawyer, who can help you craft a response. It is imperative to get timely legal advice.
Outcome #3 – The company sues you in a Virginia court. Most non-compete disputes don’t turn into lawsuits in Virginia. But if you are and your ex-employer cannot come to terms, then the company may file a lawsuit for breaking the non-compete. The lawsuit, called a complaint, will likely be filed in a Virginia state court. You will be served with the complaint and given 21 days to file an answer.
If you are served with a lawsuit for breaking a non-compete, contact a Virginia non-compete lawyer immediately. You may be able to file counter-claims against your former employer, especially if you lost your job as a result of their lawsuit. Also, you may be assert various defenses about whether the non-compete is enforceable against you. Keep in mind that lawsuits can be expensive, and it can be difficult to get Virginia non-compete cases dismissed without a hearing in the court. But a Virginia non-compete lawyer can help evaluate your options and develop a plan of action.
Need a Virginia Non-Compete Lawyer?
If you are weighing a job transition, or your ex-employer is threatening non-compete litigation, we can help. Contact the firm for a free consultation at (540) 585-1776.