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2001 SESSION

015857844
HOUSE JOINT RESOLUTION NO. 565
Offered January 10, 2001
Prefiled January 4, 2001
Establishing a joint subcommittee to study the need for codifying law governing noncompetition contracts.
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Patron-- McQuigg
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Referred to Committee on Rules
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WHEREAS, covenants not to compete are contractual provisions between employer and employee; and

WHEREAS, these contracts prevent an employee who leaves the service of his employer from performing the same job service to a competitor of the employer; and

WHEREAS, noncompetition contracts are designed to protect an employer's investment in training employees as well as an employer's company secrets or business plans; and

WHEREAS, these contracts can restrain an employee from earning a living for a certain period of time in certain geographic areas; and

WHEREAS, contract law is generally resolved in the courts through the common law system; and

WHEREAS, to date, noncompetition contracts have also been governed by common law; and

WHEREAS, the courts of the Commonwealth have not consistently interpreted or enforced noncompetition contracts; and

WHEREAS, the Code of Virginia contains little guidance for employers and employees who wish to draft enforceable contracts; and

WHEREAS, employers and employees remain uncertain as to the necessary elements of an enforceable covenant not to compete; and

WHEREAS, the changing nature of the workforce has rendered certain traditional aspects of noncompetition contracts moot; now, therefore, be it

RESOLVED by the House of Delegates, the Senate concurring, That a joint subcommittee be established to study the need for codifying law governing noncompetition contracts. In conducting its study, the joint subcommittee shall examine: (i) appropriate time limits; (ii) the propriety of geographic restrictions on competition; (iii) the particular needs of the technology industry relating to these contracts; (iv) the needs of working Virginians to earn a livelihood without unfair or burdensome restrictions on employment; and (v) any other matter that the joint subcommittee deems appropriate to the study of noncompetition contracts. The joint subcommittee shall consist of eight members as follows: five members of the House of Delegates, to be appointed by the Speaker in accordance with the principles of proportional representation contained in the Rules of the House; and three members of the Senate, to be appointed by the Senate Committee on Privileges and Elections.

The direct costs of this study shall not exceed $4,000.

The Division of Legislative Services shall provide staff support for the study. All agencies of the Commonwealth shall provide assistance to the joint subcommittee, upon request.

The joint subcommittee shall complete its work in time to submit its findings and recommendations to the Governor and the 2002 Session of the General Assembly as provided in the procedures of the Division of Legislative Automated Systems for the processing of legislative documents.

Implementation of this resolution is subject to subsequent approval and certification by the Joint Rules Committee. The Committee may withhold expenditures or delay the period for the conduct of the study.