In Virginia, restrictive covenants—particularly non-compete and non-solicitation clauses—are enforceable only if narrowly tailored to protect a legitimate business interest without unduly burdening an individual’s ability to earn a livelihood. Courts apply a three-part test: the restraint must (1) be no broader than necessary to protect the employer’s interests, (2) not be unduly harsh or oppressive to the employee, and (3) be reasonable in light of sound public policy. (See Modern Env’ts v. Stinnett, 263 Va. 491, 493 (2002)). Importantly, any ambiguity in the language is construed against the drafter (the employer, typically). The Supreme Court of Virginia has long emphasized that restrictive covenants are disfavored and must be drafted with surgical precision if they are to withstand judicial scrutiny. Earlier this month, the Norfolk Circuit Court decided Knepper v. The Lawson Companies, Inc., in which it analyzed an employer’s restrictive covenants and found them unenforceable due to indefinite language and multiple instances of overbreadth.
Kristopher Knepper, a former executive at The Lawson Companies (TLC), was hired in 2016 to serve as Director of Development and Acquisitions, later rising to Vice President. As part of his employment onboarding, Knepper signed a standalone “Restrictive Covenants Agreement” that prohibited him from engaging in low-income housing development work within broad geographic boundaries for two years after his departure. Separately, in 2020, Knepper became a partial owner of TLC’s affiliated holding company, TLC Holding, LLC, when he was granted Class B membership units. That ownership interest triggered a second set of restrictive covenants, this time embedded in the company’s Operating Agreement. These restrictions were functionally similar to those in the earlier agreement but extended indefinitely, applying as long as Knepper remained a member of the LLC.