3.7 Model Restrictive Covenant Provisions

• Library: Virginia Employment Practices and Forms (Virginia CLE) (2015 Ed.)

3.7 MODEL RESTRICTIVE COVENANT PROVISIONS

Perhaps no aspect of employment law poses greater difficulties and risks for drafting agreements than the restrictive covenant arena. There is no "one size fits all" covenant. Rather, as the diverse outcomes of the cases summarized in this chapter suggest, the practitioner should not adopt model language without considering the specific factual situation in which the covenant will be employed and the objectives and legitimate business interests of the employer seeking to use the agreement.

3.701 General Noncompetition Provision. The following provision may be used when the employer seeks to prohibit a former employee from competing against the employer within a specific geographic area.

[Form 13] [GENERAL AGREEMENT NOT TO COMPETE]

The Employee specifically agrees that during Employee's employment with the Company and for a period of _____ [months][years] after Employee's employment with the Company ceases, for whatever reason, the Employee will not engage, directly or indirectly, on Employee's own behalf or on behalf of another person or entity, in providing services or products that compete with the services or products that [Employee was engaged in providing on behalf of the Company][ the Company was engaged in providing] at any time during the six months prior to the termination of Employee's employment. This restriction shall only apply [within a ____-mile radius of the Company's headquarters in ____________, Virginia][within ____ miles of any office of the Company][within any State where the Company maintains offices][within the following counties: ____________].

3.702 Nonsolicitation or Nonservice of Customers. The following provision may be used when the employer does not intend to prohibit the former

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employee from competing with the employer generally but merely seeks to prevent the employee from soliciting or providing services or goods to customers. Although a restriction against solicitation and sales to any company customer may be enforceable in the context of a small company, for a larger company it may be necessary to limit the prohibition to customers with whom the employee had interacted while employed with the company. (The model language below provides options for both situations.) Finally, although a geographic restriction is not required in all cases, it is a good practice to include that limitation to ensure the covenant's enforceability.

[Form 14] [NONSOLICITATION OR ...