Restrictive Covenants & Employee Defense: Employment Contracts, Lawsuits & Injunctions

When working in highly competitive industries, many employers require employees to agree to complex restrictive covenants in their employment contracts. 

Restrictive covenants bind employees to non-competitive behavior through the threat of strict enforcement by court-ordered injunctions and lawsuits. They are designed to protect an employer’s business interests by restricting certain activities of an employee, both during and after the period of employment. 

Should a prior employer believe you have breached a restrictive covenant, you may receive a demand letter from your former employer to cease engaging in offending activities. In the case of an alleged serious breach, or a continued breach, you may be served with a lawsuit seeking financial damages, as well as a motion for an injunction hearing to order you to stop engaging in an activity.

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Do I have a Restrictive Covenant in my Employment Agreement?

Restrictive covenants may include many types of restrictions on competitive behavior, including:

  • Non-Compete Agreements
  • Non-Solicitation of Clients
  • Non-Solicitation of Employees
  • Non-Disparagement
  • Confidentiality or Non-Disclosure Agreements

The attorneys at Potomac Legal Group assist employees in understanding their obligations regarding restrictive covenants in employment agreements. We are available for employment contract review, counseling and negotiation, as well as post-employment restrictive covenant defense. 

Our attorneys have represented former employees in every stage of post-employment allegations, from responding to cease-and-desist letters to representing employees in temporary injunction hearings.

Restrictive Covenants: Counseling & Contract Review

Potomac Legal Group counsels employees prior to accepting new positions, as well as understanding employment contracts before leaving their current job. While many restrictions may be enforceable, in some jurisdictions, there may be limits on enforceability or the extent to which a former employer may exert its reach. 

Our attorneys are highly experienced in understanding employment agreements and their enforceability in Washington, D.C., Maryland and Virginia, and employees throughout the region have relied on the Firm’s expert guidance.

Restrictive covenants may impact your career long after your tenure with an employer, potentially limiting future employment opportunities or entrepreneurial ventures. Our role is to assist in advising you of these implications so that you can make informed decisions without risk of serious financial damage.

From the initial contract review to navigating post-employment restrictions, our attorneys are available to assist you in understanding your options.

Potomac Legal Group Prevails at Preliminary Injunction Hearing

In a recent matter, Potomac Legal Group, led by managing partner Natalie Koss, defended two employees of a Virginia-based financial advisory firm in a legal battle against their former employer. 

The employer had filed a motion for a preliminary injunction, alleging that the employees had breached the restrictive covenants in their employment contracts by working with customers after resigning. The case hinged on the claim that they had violated their restrictive covenant agreements.

The legal confrontation took place over two days in the Fairfax County Circuit Court. The defendants’ arguments focused on the employer’s inability to demonstrate the essential elements required for a preliminary injunction under Virginia law. The decision in this preliminary injunction hearing was significant, as it would decide whether the financial advisors could continue their business operations.

Potomac Legal Group and its clients emerged victorious, and the court rejected the employer’s motion for a temporary injunction. The victory allowed the financial advisors to maintain their thriving business, leading to the withdrawal of all claims by the former employer against the employees.

Overview of Restrictive Covenants

Restrictive covenants limit certain actions of employees both during and after their tenure. These clauses are designed to protect the employer’s interests. The most common types of restrictive covenants include:

Non-Compete Agreements: These agreements restrict employees from joining or starting a competing business within a specified geographical area and time frame after leaving the employer. The extent of these restrictions varies, but they can significantly impact your ability to work in the same industry post-employment.

Non-Solicitation Agreements: These covenants prevent former employees from soliciting the company’s clients, customers, or even fellow employees for a certain period after leaving the employer.

Confidentiality Agreements: Often a core part of employment contracts, these agreements require employees to keep proprietary information and trade secrets confidential. This obligation typically continues even after the employment relationship ends.

Non-Disparagement Clauses: These clauses are designed to prevent former employees from making negative statements about their previous employer, which could harm the company’s reputation.

The Importance of Legal Review

Before Signing an Employment Contract

Restrictive covenants can be nuanced and complex and their implications powerful. A Potomac Legal Group attorney specializing in employment law can provide a clear understanding of these covenants. Our attorneys may also seek to negotiate on your behalf to modify or eliminate provisions that are overly restrictive or unfair, ensuring that your contract is equitable.

Before Leaving a Job

If you’re contemplating a job change and did not previously consult a lawyer, it’s important to seek legal advice before making any decisions. Potomac Legal Group can review your existing contract, identify potential risks, and strategize the best course of action for your career move.

Understanding these restrictive covenants and their implications is vital for any professional. With expert legal guidance, you can develop a strategy to navigate your employment situation, ensuring your career decisions are informed and strategically sound.

Responding to Breaches of Restrictive Covenants

Navigating the aftermath of an alleged breach of a restrictive covenant in your employment contract requires careful and strategic legal action. Whether you’ve received a demand letter or are facing a lawsuit, understanding your legal position is possible with the experienced counsel of Potomac Legal Group.

You should never ignore a demand letter alleging a violation of a restrictive covenant. This letter can precede legal action. Consulting with an attorney as soon as you receive such a letter is important for protecting your rights. Our attorneys can help you understand the allegations, the validity of the claims, and develop a strategy for moving forward.

If you find yourself as the defendant in a lawsuit alleging breaches of restrictive covenants, securing skilled legal representation is vital. Employment law, especially concerning restrictive covenants, can be highly complex. An experienced attorney will navigate these complexities on your behalf.

Defense Strategies

Not all restrictive covenants are legally enforceable, and the jurisdictional rules that govern your agreement are important to understand. The scope, duration, geographic limitations, or necessity for business protection may not comport with local law or may be overly broad.

Preliminary Injunction Motions

If your former employer files a motion for a preliminary injunction to immediately stop you from engaging in a restricted activity, time is of the essence. Such motions seek immediate court intervention and can have significant effects on your career and finances. In many situations, your current employer may suspend or terminate your employment to reduce its exposure to legal liability.

Your attorney will craft a defense focusing on the injunction’s impact on your livelihood and its legal merits. This might include arguing the harm caused to you, questioning the validity of the restrictive covenant, or challenging the need for such an injunction.

The attorneys at Potomac Legal Group are employment litigators with significant courtroom experience, including successes in defeating preliminary injunctions.

Lawyers for Employees with Restrictive Covenant Disputes

Potomac Legal Group specializes in employee representation and strategies to reduce the burden of restrictive covenants on employees. 

Whether you are preparing to sign a new employment contract, contemplating a career transition, or embroiled in legal disputes over an alleged breach of a restrictive covenant, our experienced employment attorneys are available to provide assistance. We are here to protect your rights and professional aspirations.

The decisions you make today regarding your employment contract will have lasting implications. Let us help you make informed decisions that seek to reduce your liability and protect your reputation and career.

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