A West Virginia non-compete agreement is a provision in an employment or sales contract that protects a business against unfair appropriation of assets for competitive purposes. Non-compete agreements arising in the sale of a business are enforced generously, whereas non-competes restraining employees are scrutinized and enforced more narrowly in consideration of the public’s interest in freedom of trade.

Are Non-Competes Enforceable in West Virginia?

Yes, a non-compete may be enforced if it is reasonable and subject to appropriate time and geographic limits. (Weaver v. Ritchie (1996))

Employment vs. Sale of a Business

Non-compete agreements may arise in connection with an employment contract or as a provision in the sale of a business. West Virginia courts enforce the latter more liberally given the public policy interests at play. A former employee has a strong prevailing interest in the freedom to continue pursuing their profession, whereas the seller of a business willingly gives up the competitive advantages and assets particular to that business in exchange for profit. (Weaver v. Ritchie (1996))

Reasonableness

Courts apply a test of reasonableness to non-compete agreements at varying degrees of strictness, with more deference given to non-competes in sales agreements. The terms of the agreement must be reasonable in the particular context of the case at hand under the following three standards:

1. The restrictions are necessary for the protection of the enforcing party
2. The restricted party is not unduly burdened as a result of the agreement
3. The agreement is not in conflict with public policy interests

(Reddy v. Cmty. Health Found. of Man (1982))

Legitimate Interests

A legitimate non-compete agreement is used to protect a business from unfair competition, meaning competitive activity that would not be possible without an asset provided by the protected party. (Reddy v. Cmty. Health Found. of Man (1982)) Examples include:

• Confidential business information such as customer lists and trade secrets (Reddy v. Cmty. Health Found. of Man (1982))
• Highly specialized skills or training unique to the business (Moore Bus. Forms, Inc. v. Foppiano (1989))
• Goodwill in the sale of a business (Gant v. Hygeia Facilities Found., Inc. (1989))

Covenants protecting trade secrets are generally favored as legitimate and necessary restraints of trade, while covenants seeking to protect customer relationships and labor skills are viewed with more scrutiny. (Helms Boys Inc. v. Brady (1982))

Restricted Professions

Attorneys (prohibited)

Non-compete agreements are not enforceable against attorneys. With the exceptions of agreements concerning retirement benefits or sales agreements for a law firm, lawyers may not enter any contract that restricts their right to practice. (West Virginia Rules of Professional Conduct 5.6)

Physicians (limited)

Under § 47-11E-2, non-compete agreements involving physicians are subject to the following restraints:

• Must be limited to one year and a territorial scope of thirty (30) miles
• Will be voided upon termination of employment by the employer

Burden of Proof

If someone under a restrictive covenant seeks to invalid the agreement in its entirety, they bear the burden of proving that its terms are inherently unreasonable. In an action to enforce a noncompete, however, the enforcing party must prove that the agreement is reasonable and necessary for the protection of legitimate interests. (Huntington Eye Associates, Inc. v. LoCascio (2001))

Continued Employment (consideration)

New consideration is required to support a non-compete agreement that is entered later than the start of employment. (Env’t Prod. Co. v. Duncan (1981))

Maximum Term

There is no statutory or judicial rule placing an exact term limit on covenants not to compete. Instead, the courts evaluate time limitations based on the standard of reasonableness. Typically lasting between one (1) and five (5) years, valid covenants are those with time scopes necessary to protect the legitimate interests of the enforcing party.

Blue Penciling (allowed)

If a non-compete agreement is overly broad but otherwise valid (includes consideration, was entered in good faith, and is necessary to protect the business involved), it may be partially enforced. However, courts take caution when “blue-penciling” or modifying a contract. The practice is only done when necessary to bring a contract into compliance with the reasonableness standard, such as reducing a term limit to that which is necessary given the facts and circumstances. (Reddy v. Cmty. Health Found. of Man (1982))