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West Virginia Case Reinforces that an Employee's General Managerial Skills are Not a Protectable Interest Sufficient to Justify a Restrictive Covenant

Employment Contract

In West Virginia, an inherently reasonable restrictive covenant is presumptively enforceable if the employer can show that it has interests requiring protection from the employee. In other words, a reasonable geographic scope and duration are not enough. Examples of protectable employer interests include investment in the skills the employee acquired in the course of employment, confidential or unique employer information (e.g., trade secrets, and customer lists), and the employer's good will. A recent opinion of the Supreme Court of Appeals of West Virginia serves as a reminder that, in order for an investment in an employee's skills to justify a restrictive covenant, those skills cannot be of a general managerial nature.

In Special Services Bureau, Inc. v. Friend, (No. 18-0478, September 9, 2019), a bail bond company appealed a trial court's refusal to enforce a restrictive covenant against one of its former employees who had gone on to work for a competitor. The company had trained this employee to respond to calls within twenty minutes, attend bail hearings, require persons on bond to call in on a weekly basis, collect payments, and ensure all contracts were completely filled out within one week. The Supreme Court of Appeals affirmed the trial court's denial, finding no error in the trial court's conclusion that these skills were of a general managerial nature insufficient to create a protectable interest necessary to support the restrictive covenant. Put another way, the employer-provided training on these skills did not justify the non-compete; score one for the employee. The Supreme Court of Appeals also found that the trial court did not err in declining to analyze the reasonableness of the non-compete because no protectable interest existed.

The reminders for West Virginia employers are this: i) a non-compete can seem reasonable in geographic scope and duration, but still be found unenforceable if there is no valid protectable interest; ii) imparting general managerial skills upon your employees like those listed above will probably not be enough to create such a protectable interest; ad iii) it never hurts to have qualified legal counsel review restrictive covenants before you get your employees to sign them.

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