Preferred Sys. Solutions, Inc. v. GP Consulting, LLC
August 5, 2020
Plaintiff, a government contractor, filed suit against a subcontractor for breach of contract based upon a covenant not to compete. The noncompete clause provided that for twelve months after the contract expired the subcontractor would not enter into a contract as a subcontractor with any other contractor to provide “the same or similar support” that the contractor was providing to the government agency. The trial court awarded the Plaintiff compensatory damages based on its finding that the subcontractor had breached the noncompete clause in their contract by working for another contractor on the government agency project. The Supreme Court of Virginia affirmed, holding that contracting limits are enforceable if they are: (1) narrowly drawn to protect an employer’s legitimate business interests; (2) not unduly burdensome on an employee’s ability to earn a living; and (3) not against public policy.