Employee Non-Compete Agreement and Enforceability Memo — West Virginia

blocks before sending. -->

WEST VIRGINIA Employee Non-Compete Agreement and Enforceability Memo

Quick-Reference Summary

Part A — Enforceability Memo

TO: [Hiring Manager / General Counsel]
FROM: [Drafting Attorney]
RE: Enforceability of Proposed Non-Compete — West Virginia Employee
DATE: [__/__/____]

1. Threshold — Is the Employee a Physician?

If the employee is a physician, W. Va. Code § 47-11E-2 (the "Physicians Freedom of Practice Act") imposes mandatory caps:

Any physician non-compete that exceeds these caps is unenforceable to that extent. The Bowles Rice analysis confirms this is a statutory limitation, not an outright ban — physician non-competes remain enforceable if drafted within the caps AND the employer is not the party who terminates the relationship.

Drafting note: Recent legislative efforts to fully ban WV physician non-competes (2023, 2024, 2025 sessions) have failed; the 2017 Act remains controlling.

2. Common-Law Reasonableness Test (Non-Physician)

Reddy v. Community Health Foundation of Man, 171 W. Va. 368, 298 S.E.2d 906 (1982); Voorhees v. Guyan Machinery Co., 191 W. Va. 450, 446 S.E.2d 672 (1994); Wood v. Acordia of West Virginia, Inc., 217 W. Va. 406, 618 S.E.2d 415 (2005).

3. Blue-Pencil / Reformation

West Virginia courts may modify (blue-pencil) overbroad covenants. Appalachian Laboratories, Inc. v. Bostic, 178 W. Va. 386, 359 S.E.2d 614 (1987). However, courts prefer covenants that are reasonable as written; rely on reformation only as a backstop.

4. Antitrust Overlay

W. Va. Code § 47-18-1 et seq. — the West Virginia Antitrust Act. In Reddy, the Court analyzed restrictive covenants under both common-law reasonableness AND the WV Antitrust Act, holding the two work together. An overbroad covenant may face dual challenges.

5. Consideration

6. Remedies

• Injunctive relief available (preliminary and permanent).
• Bond required at court's discretion (W. Va. R. Civ. P. 65).
• Liquidated damages enforceable if reasonable; void if penalty.
• Attorneys' fees recoverable only if contractually provided.

7. Recent Developments

• 2017 Physicians Freedom of Practice Act: Enacted under Gov. Justice; the controlling statute for physician non-competes.
• 2023–2025 Legislative Proposals: Bills to broaden the physician ban or impose general non-compete restrictions have been introduced but not enacted.
• FTC Non-Compete Rule (2024): Vacated nationally by Ryan LLC v. FTC, N.D. Tex. (Aug. 20, 2024). WV common law and the Physicians Freedom of Practice Act control.

Part B — Non-Compete Agreement

THIS EMPLOYEE NON-COMPETE AGREEMENT (this "Agreement") is entered into as of [__/__/____] (the "Effective Date"),

by and between:

EMPLOYER:
Name: [________________________________]
Address: [________________________________]
City/County, West Virginia [ZIP]: [________________________________]
(the "Company")

and

EMPLOYEE:
Name: [________________________________]
Address: [________________________________]
City/County, West Virginia [ZIP]: [________________________________]
(the "Employee")

RECITALS

WHEREAS, the Company is engaged in the business of [________________________________] in West Virginia and elsewhere (the "Business");

WHEREAS, the Company has invested in confidential information, customer goodwill, and specialized employee training that constitute legitimate protectable interests under West Virginia law (Voorhees v. Guyan Machinery; Wood v. Acordia);

WHEREAS, Employee will hold the position of [________________________________] with access to such interests;

NOW, THEREFORE, the Parties agree:

1. INDUSTRY CARVE-OUT — WEST VIRGINIA PHYSICIANS

1.1 Physician Status. Employee ☐ IS / ☐ IS NOT a physician practicing medicine in West Virginia within the meaning of W. Va. Code § 47-11E-1 et seq. (the "Physicians Freedom of Practice Act").

1.2 Statutory Caps. If Employee is a physician, then notwithstanding any contrary provision of this Agreement:

(a) The Restricted Period in Section 5 shall not exceed one (1) year following termination (W. Va. Code § 47-11E-2(a)(1));

(b) The Restricted Territory shall not exceed thirty (30) road miles from Employee's primary place of practice with the Company (W. Va. Code § 47-11E-2(a)(2));

(c) The non-compete shall be void and unenforceable upon termination of Employee's employment by the Company (W. Va. Code § 47-11E-2(b)). It remains enforceable only if (i) Employee resigns voluntarily without good cause attributable to Company action; or (ii) Employee is terminated for cause as defined herein (subject to judicial scrutiny).

1.3 Severability. The statutory limits in § 47-11E-2 do not affect Sections 4 (Confidential Information) or 7 (Non-Solicitation of Employees), which apply independently.

2. DEFINITIONS

2.1 "Confidential Information" means non-public proprietary or trade-secret information of the Company, consistent with the West Virginia Uniform Trade Secrets Act, W. Va. Code § 47-22-1 et seq., and the federal Defend Trade Secrets Act, 18 U.S.C. § 1836.

2.2 "Customer" means any person or entity that was a customer of the Company during the [____]-month period preceding Employee's termination, or a prospective customer with whom Employee had material contact during the same period.

2.3 "Restricted Territory" means:

☐ Option A — Physician: within thirty (30) road miles of Employee's primary place of practice with the Company at [________________________________] (per § 47-11E-2(a)(2)).

☐ Option B — Counties: the following West Virginia counties: [________________________________].

☐ Option C — Service Area: the geographic area in which Employee provided services or had material customer contact during the final [____] months of employment.

2.4 "Restricted Period" means [____] months following termination, not exceeding 12 months for physicians (§ 47-11E-2(a)(1)); typically 12–24 months for non-physician roles.

2.5 "Competing Business" means a person or entity providing products or services substantially similar to or competitive with the Business.

3. CONSIDERATION

☐ At hire: condition of and consideration for the offer of employment.

☐ Mid-employment: additional consideration of $[____] [signing/retention bonus / promotion / equity grant].

☐ At separation: severance of $[____] under a separate Separation Agreement.

4. CONFIDENTIAL INFORMATION

Employee shall not use or disclose Confidential Information except as authorized or required by law. DTSA notice (18 U.S.C. § 1833(b)): Trade-secret disclosure in confidence to a government official or attorney solely to report or investigate suspected illegal activity, or in a sealed court filing, is immunized.

5. NON-COMPETE

During the Restricted Period and within the Restricted Territory, Employee shall not, directly or indirectly:

(a) own, manage, operate, or be employed by a Competing Business in a role substantially similar to Employee's role with the Company; or

(b) provide services to a Competing Business that involve use of the Company's Confidential Information.

For physician Employees, this Section 5 is subject to and limited by W. Va. Code § 47-11E-2.

6. NON-SOLICITATION OF CUSTOMERS / PATIENTS

During the Restricted Period, Employee shall not, on behalf of a Competing Business, solicit or accept business from any Customer (or, for physicians, patient seen during employment).

7. NON-SOLICITATION OF EMPLOYEES

During the Restricted Period, Employee shall not solicit, recruit, or induce any employee of the Company to terminate their employment.

8. INJUNCTIVE RELIEF

Employee acknowledges that breach of Sections 4–7 may cause irreparable harm. The Company may seek temporary, preliminary, and permanent injunctive relief.

9. REFORMATION / BLUE-PENCIL

Pursuant to Appalachian Laboratories, Inc. v. Bostic, 178 W. Va. 386 (1987), the Parties expressly authorize a court to modify any unreasonable provision to the maximum extent enforceable under West Virginia law.

10. CHOICE OF LAW / VENUE

This Agreement is governed by West Virginia law. Exclusive venue lies in the Circuit Court of [______] County, West Virginia, or the U.S. District Court for the [Northern/Southern] District of West Virginia.

11. ENTIRE AGREEMENT / COUNTERPARTS

Entire agreement. May be executed in counterparts and by electronic signature pursuant to the West Virginia Uniform Electronic Transactions Act, W. Va. Code § 39A-1-1 et seq.

EXECUTION

Part C — Pre-Signing Checklist

☐ Confirmed whether Employee is a physician (W. Va. Code § 47-11E-1 et seq.)

☐ If physician: duration ≤ 1 year (§ 47-11E-2(a)(1))

☐ If physician: geography ≤ 30 road miles from primary practice location (§ 47-11E-2(a)(2))

☐ If physician: drafted to anticipate void-on-employer-termination rule (§ 47-11E-2(b))

☐ If non-physician: reasonableness analysis under Reddy/Wood/Voorhees

☐ Legitimate business interest documented (goodwill, confidential info, trade secrets, training)

☐ Duration ≤ 2 years (non-physician); reasonable record for any longer term

☐ Geographic scope matches Employee's territory AND Company's market

☐ Scope limited to roles substantially similar to Employee's actual role

☐ Consideration documented (at-hire offer; mid-employment additional; or separation severance)

☐ Confidentiality / NDA included (WV Uniform Trade Secrets Act § 47-22-1 et seq.)

☐ DTSA whistleblower notice included (18 U.S.C. § 1833(b))

☐ Reformation / blue-pencil clause included

☐ Antitrust analysis done (§ 47-18-1 et seq.)

☐ West Virginia choice of law and venue

☐ E-signature / counterpart language (WV UETA)

☐ Reviewed by West Virginia-licensed attorney before execution

☐ Removed all <!-- GUIDANCE --> comments before delivery

Sources and References

• W. Va. Code § 47-11E-1 et seq. — Physicians Freedom of Practice Act
• W. Va. Code § 47-11E-2: https://code.wvlegislature.gov/47-11E-2/
• W. Va. Code § 47-18-1 et seq. — West Virginia Antitrust Act
• W. Va. Code § 47-22-1 et seq. — Uniform Trade Secrets Act
• Reddy v. Community Health Foundation of Man, 171 W. Va. 368, 298 S.E.2d 906 (1982): https://law.justia.com/cases/west-virginia/supreme-court/1982/15453-4.html
• Wood v. Acordia of West Virginia, Inc., 217 W. Va. 406, 618 S.E.2d 415 (2005): https://www.courtswv.gov/sites/default/pubfilesmnt/2023-11/31863.pdf
• Voorhees v. Guyan Machinery Co., 191 W. Va. 450, 446 S.E.2d 672 (1994)
• Appalachian Laboratories, Inc. v. Bostic, 178 W. Va. 386, 359 S.E.2d 614 (1987)
• Pancake Realty Co. v. Harber, 137 W. Va. 605, 73 S.E.2d 438 (1952)
• Bowles Rice — Non-Compete Bans in West Virginia: https://www.bowlesrice.com/west-virginia-health-care-law-blog/non-compete-bans-in-west-virginia
• Defend Trade Secrets Act, 18 U.S.C. § 1836; whistleblower immunity, 18 U.S.C. § 1833(b)
• Ryan LLC v. FTC, No. 3:24-CV-00986-E (N.D. Tex. Aug. 20, 2024) (FTC Non-Compete Rule vacated)