I love the New Year.
I make resolutions, work out, eat better and do everything that makes me a whole person, for about three weeks. Then the pace of life kicks in and I lose my resolve again until next year.
For many Virginia employees, the New Year seems like a good time to finally make the leap, take the plunge – start a new business. And for some, it very well may be a good time for major change.
But the best new businesses, are those that are well planned, considered and crafted. And often, it’s not the product or sales pitch or marketing plan that needs the work. It is the behind the scenes transition from one business to another, evaluating legal duties and risks, that leads to a better business.
- Can you take clients?
- If so, when?
- How should you tell them?
- When should you start planning your new business? What about the website, EIN number, business cards, etc?
- Is it against the law to start a competing company that isn’t actually competing yet?
- What about waiting for the raise, and then leaving – is that bad? Is it illegal?
- Can they sue your new business? What if your wife is the new business owner and you just the employee (BTW – BAD IDEA, lets discuss this one later).
Our Google analytics feed is replete with these kind of questions and more. And while I would love to answer them all in one very brief and witty blog post, it is not possible. It is not possible because these questions seek legal advice and when it comes to non-competes, that advice cannot (or should not) be given in a total vacuum without context of the industry, players, contracts at issue, etc.
So, before you make plans for 2015 to be the year of the small business in your living room, make sure you have asked the right questions of a qualified Virginia lawyer who can help advise what rights you have, and what actions will protect you in the long term.
Happy New Year all. Now I’m off to buy a shake weight, or ab roller – just to be used until February.
There is a great article in the Seattle Times about a $15 an hour job forcing new employees to sign non-compete agreements.
There has been a great deal of focus the last few weeks about low wage workers being asked to sign these non-competition agreements, because basic fairness just seems to go out the window when a guy cleaning carpets, or making sandwiches, or washing dogs is forced to sign a contract that would prevent him from working at another business in the industry.
And while I personally and professionally welcome the discussion and public outrage, I don’t think they are any more unfair for low wage workers, than for high wage earners. I think they are categorically unfair for everyone.
Why should my plumber be allowed to open a competing business and take clients but my oncologist be prohibited from accepting me as a patient when she moves to another local hospital? Why should a hair stylist be prohibited from cutting my hair but the guy who washes it be allowed to work for a competitor? Frankly, in a capitalistic society, people should be allowed to compete.
They should be allowed to provide better services for clients, patients or costumers, and let the market worry about success, fairness etc.
I am not saying that businesses don’t have some protectable interests in trade secrets, or confidential information. I am saying however, that we should be equally outraged that the guy at the sandwich shop has a non-compete, as we are that our accountant does.
So while I agree with and appreciate the article in the Seattle Times, and understand why it is easy to highlight the $3 an hour increase invoking litigation, I don’t want to lose the forest for the trees. Fair is fair, no matter who you are or what you make. And oh by the way, lawyers are not allowed to have non-competes, and yet we are allowed to draft them for other people? Does that sound fair to you?
You have likely heard by now of the recent issue with Jimmy Johns sandwich shops, and their desire to have their minimum wage employees sign non-competes (as well as managers, etc.).
Normally, specialty food stores have employees sign confidentiality agreements, that may say (paraphrasing of course) “hey employee, don’t go share our secret sauce recipe when you leave. It’s important to us and you agree not to share it!” But this chain, has decided to take it one step further and prohibit said sandwich makers, from leaving and going to work at another sandwich shop.
Do you really think a part time minimum wage employee can cause financial harm to a huge national chain, by going to make sandwiches at another huge national chain? I don’t. So while I think these provisions are likely unenforceable under Virginia law and it is unlikely the company could ever prove damages, for once, people are standing up for the employee and saying the issue of enforceability is NOT THE POINT.
THE POINT IS, why even ask an employee, or require an employee to sign such a ridiculous contract?
And while I never mind getting back on my soap box, that has been my exact point for years.
While it is great our courts will evaluate these on a case by case basis, and eventually throw out the bad ones – that costs money and takes time. Shouldn’t our law makers be willing to create a few rules that prevents this kind of judicial waste and burden on employees?
But really what my friends in DC do is of little matter on this issue. It’s a state law issue and as such I need my friends in Richmond to care enough about workers in the Commonwealth, business growth and development, and the future economic impact on our state to take notice.
So- Richmond, you are hereby on notice. You should start paying attention. Not all contracts are fair. Not all contracts are just. Not all contracts should be allowed under Virginia law.
And Jimmy Johns, I won’t be buying your sandwiches anytime soon… Secret sauce or not.
Dan Frith helps employees and businesses with non-compete contracts.
Lauren Ellerman assists clients throughout Virginia in business cases.
Lauren Davis has both her JD, and Masters Degree in Social Work. She is dedicated to serving her clients and their complex litigation needs.