Non-compete agreements are one of the most prominent issues, if not the most prominent issue, when it comes to litigation regarding employment contracts.

In a recent decision, the Virginia Supreme Court issued a ruling that will prevent companies from enforcing non-compete agreements that are so broad as to prevent a former employer from working for a competitor in any capacity.

The lawsuit which gave rise to the ruling involved a dispute between Home Paramount Pest Control and a former employee from its Falls Church branch. According to the company, the former employee had been attempting to attract Home Paramount customers after beginning work for a competitor based in Springfield, by the name of Connor's Termite and Pest Control.

The non-compete agreement imposed on the employee was found to be too broad because it prevented him from working at an industry competitor in any capacity.

What the decision illustrates is basically that a company cannot restrict an employee from working for a competitor in any capacity.

The decision is not precedent-setting, however, sources said, as the Virginia Supreme Court has already disapproved non-compete agreements on similar grounds in the past. What it does do is remind employers of their limits in restricting employees' ability to work.

When a court approaches a non-compete agreement, it will look for whether the agreement was reasonable given the facts and circumstances of the case. A number of factors are taken into account when determining the reasonableness of an agreement. Among them are the geographic scope, the duration and the type of activity the former employee is not able to engage in.

Source: Washington Post, "Va. Supreme Court: Non-compete pacts can't be too broad," Catherine Ho, November 13, 2011.