Are employee non-compete agreements enforceable in the U.S. Virgin Islands?
Sometimes. The Virgin Islands is a reasonableness jurisdiction, not a per se ban like California or North Dakota. A covenant can be enforced if it is ancillary to a valid relationship, supported by consideration, and no broader than necessary to protect a legitimate business interest. But there is no non-compete statute, the leading authority is a single trial-court decision with no V.I. Supreme Court ruling behind it, and that decision struck the covenant in front of it down — so enforcement is real but fact-dependent and far from automatic .
The Virgin Islands is an unincorporated U.S. territory. An employment-covenant dispute is decided in the first instance by the Superior Court of the Virgin Islands applying territorial law, with appeals to the Supreme Court of the Virgin Islands (established 2007) and a parallel federal track in the District Court of the Virgin Islands under the Third Circuit. There is no code section that governs employee non-competes; enforceability is a matter of territorial common law, which the courts build through the methodology described below.
Because the law lives in case decisions rather than a statute, most of the operating rules here are anchored to one opinion — Arvidson v. Buchar — and to the reception statute that tells Virgin Islands courts where to find their common law . A covenant that would survive comfortably in a blue-pencil state still carries genuine first-impression risk in the territory.
Sources for this answer
Case law · 2019-09-10
A.1 Arvidson v. BucharArvidson v. Buchar is the leading Virgin Islands non-compete decision (a Superior Court / trial-level opinion, with no V.I. Supreme Court ruling on point): the court adopted a common-law rule of reasonableness for covenants not to compete and, applying it, voided the covenant before it as a matter of law.
Accordingly, the Arvidsons have met their summary judgment burden, and the Court finds the covenant to not compete invalid and unenforceable as a matter of law
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).
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A.2 1 V.I.C. § 4 — Application of common law; restatements1 V.I.C. § 4 makes the common law as expressed in the Restatements the rules of decision in Virgin Islands courts in the absence of local law to the contrary — the historical hinge by which the Restatement reasonableness framework first reached Virgin Islands non-compete law.
shall be the rules of decision in the courts of the Virgin Islands in cases to which they apply, in the absence of local laws to the contrary.
See 1 V.I.C. § 4.
What test does the Superior Court apply to a Virgin Islands non-compete?
The Superior Court applies a common-law rule of reasonableness. Under Arvidson, a partial restraint of trade is valid only when it is ancillary to a valid contract or transaction, supported by valid consideration, protects a legitimate business interest, and is reasonable in its duration, geographic area, and the scope of activity it restricts . Reasonableness is then measured against five factors the court drew from earlier Virgin Islands case law .
The court frames the inquiry as a balance among the employer's legitimate business interest, the hardship the restraint imposes on the employee, and the public interest — assessed through the covenant's time, place, and manner. The five factors restate that balance as concrete questions:
The ultimate determination of reasonableness is a question of law, but it is a fact-intensive one: the court weighs the totality of the circumstances rather than applying a fixed formula . For in-house counsel that means a covenant is judged on its specific facts, and a clause that omits any durational, territorial, or activity limit will not survive.
Sources for this answer
Case law · 2019-09-10
B.1 Arvidson v. BucharArvidson adopts the rule of reasonableness for Virgin Islands non-competes: a partial restraint of trade may be valid and enforceable when it is ancillary to a valid contract or transaction, supported by valid consideration, protects a legitimate business interest, and is reasonable as to duration, geography, and scope.
In accordance, this Court similarly adopts the same rule of reasonableness
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).
Case law · 2019-09-10
B.2 Arvidson v. BucharArvidson measures reasonableness against five factors drawn from earlier Virgin Islands case law: the duration of the restriction, the area of the restriction, whether the employer's interest is reasonably protected, whether undue hardship falls on the employee, and whether the public interest is reasonably protected.
This test of reasonableness must be applied to the following five factors 1 Is the duration of the restriction reasonable? 2 Is the area of restriction reasonable? 3 Is the interest of the employer reasonably protected? 4 Is undue hardship imposed on the employee? 5 Is the public interest reasonably protected?
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).
Case law · 2019-09-10
B.3 Arvidson v. BucharAlthough the ultimate determination of reasonableness is a question of law, Arvidson treats it as a fact-intensive inquiry that weighs the totality of the circumstances rather than applying a rigid formula.
reasonableness is a fact intensive inquiry that depends on weighing the totality of the circumstances
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).
If there is no statute, where does the non-compete rule come from?
From the territory's common law, which the courts now build deliberately rather than by copying the Restatements. Historically, 1 V.I.C. § 4 directed Virgin Islands courts to apply the Restatements as their rules of decision . In Banks v. International Rental & Leasing Corp., the Supreme Court of the Virgin Islands held that the Legislature did not intend that statute to force mechanical application of the latest Restatement , and in Connor it set out the three-factor analysis Virgin Islands courts use to choose a rule .
This matters for non-competes because Arvidson did not simply lift Restatement (Second) of Contracts § 188 off the shelf. It ran the Banks analysis and chose an indigenous reasonableness rule, which is why the Virgin Islands standard is a common-law balance rather than a verbatim Restatement test.
Under Connor, when the law is unsettled the court does not default to the majority rule automatically; it asks which approach is soundest for the territory:
The practical takeaway: a covenant should be defended on Virgin Islands terms. Citing only mainland precedent or the Restatement as if it controlled invites a Banks challenge that the rule was never properly adopted here.
Sources for this answer
Case law · 2011-12-15
C.1 Banks v. International Rental & Leasing Corp.Banks quotes 1 V.I.C. § 4, the reception statute that made the Restatements the rules of decision in Virgin Islands courts in the absence of local law — the starting point the court then limited.
The rules of the common law, as expressed in the restatements of the law approved by the American Law Institute, and to the extent not so expressed, as generally understood and applied in the United States, shall be the rules of decision in the courts of the Virgin Islands in cases to which they apply, in the absence of local laws to the contrary.
See Banks v. Int'l Rental & Leasing Corp., 55 V.I. 967 (V.I. 2011).
Case law · 2011-12-15
C.2 Banks v. International Rental & Leasing Corp.Banks holds that the Legislature did not intend 1 V.I.C. § 4 to compel the Supreme Court to apply the most recent Restatement mechanically — freeing Virgin Islands courts to develop their own common law.
We conclude that the Legislature did not intend for section 4 of title 1 to compel this Court to mechanically apply the most recent Restatement.
See Banks v. Int'l Rental & Leasing Corp., 55 V.I. 967 (V.I. 2011).
Case law · 2014-02-24
C.3 Government of the Virgin Islands v. ConnorPDFConnor restates the Banks methodology: instead of mechanistically following the Restatements, Virgin Islands courts weigh three non-dispositive factors — prior local adoption, the majority position, and most importantly the soundest rule for the Virgin Islands.
Rather, this Court has instructed that, instead of mechanistically following the Restatements, courts should consider "three non-dispositive factors" to determine Virgin Islands common law: "(1) whether any Virgin Islands courts have previously adopted a particular rule; (2) the position taken by a majority of courts from other jurisdictions; and (3) most importantly, which approach represents the soundest rule for the Virgin Islands."
See Gov't of the V.I. v. Connor, 60 V.I. 597 (V.I. 2014).
How do courts judge a covenant's duration, geographic area, and scope?
By asking whether each dimension is no broader than necessary to protect a legitimate interest. Arvidson struck its covenant precisely because it gave no durational, territorial, or activity limit and never identified the interest it was meant to protect . The older decision in V.I. Diving Schools v. Dixon voided a covenant on the same ground — that it was an unreasonable restraint greater than necessary to protect the employer's business interest .
Geography deserves special attention. The territory is three small islands — St. Thomas, St. Croix, and St. John — so a territory-wide or worldwide restraint is hard to justify as the narrowest protection of a genuine interest. The same logic that makes a 50-mile radius unremarkable on the mainland can make an all-islands restraint look like a naked barrier to earning a living.
A covenant should therefore state an explicit duration, a defined geographic area tied to where the employer actually competes, and a scope limited to the activities that threaten the protected interest. Dixon is a 1983 Territorial Court decision predating Banks, so treat it as persuasive illustration rather than binding doctrine — but its reasoning tracks the modern Arvidson test.
Sources for this answer
Case law · 2019-09-10
D.1 Arvidson v. BucharArvidson voided its covenant because it failed the protectable-interest test and provided no time, place, or manner restriction, making it overly broad and invalid.
The Covenant to not compete does not pass the three pronged business interest test and, by failing to provide time, place, and manner restrictions, is overly broad and invalid
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).
Case law · 1983-10-07
D.2 V.I. Diving Schools/Supplies, Inc. v. DixonPDFV.I. Diving Schools v. Dixon, an earlier Territorial Court decision, voided a non-compete as an unreasonable restraint on competition that was against public policy — illustrating the same greater-than-necessary standard later adopted in Arvidson.
restrictive clauses of the agreement are void and unenforceable as against public policy on the ground that they are unreasonable restraint on competition.
See V.I. Diving Schools/Supplies, Inc. v. Dixon, Civ. No. 1046/1982 (Terr. Ct. V.I. Oct. 7, 1983).
What consideration supports a Virgin Islands non-compete, and is continued employment enough?
Arvidson makes valid consideration an element of an enforceable covenant, but no Virgin Islands decision squarely holds whether continued employment alone is sufficient for a covenant signed mid-employment . The wrinkle is that the territory is not an at-will jurisdiction: the Wrongful Discharge Act lets an employer dismiss an employee for only nine enumerated reasons , so the mainland argument that an employer gives value by merely refraining from firing is weaker here.
Because the Wrongful Discharge Act limits when an employer may fire, a court could view a bare promise of continued employment as adding little new value. The conservative practice is to support a mid-employment covenant with fresh, independent consideration — a bonus, a raise, a promotion, or specialized training — rather than rely on continued employment alone .
No on-point Virgin Islands case resolves the question, so this is a planning judgment rather than a settled rule. Obtaining the covenant at hire — when the offer of employment is itself the consideration — avoids the mid-employment problem, though even a covenant signed at hire must still satisfy Arvidson's ancillary, protectable-interest, and reasonable-scope requirements.
Sources for this answer
Case law · 2019-09-10
E.1 Arvidson v. BucharArvidson lists valid consideration as a required element of an enforceable Virgin Islands non-compete, framing the covenant as valid only when ancillary to a valid contract or transaction and supported by valid consideration.
is supported by valid consideration
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).
Case law · 2019-09-10
E.2 Arvidson v. BucharArvidson notes that the Virgin Islands Wrongful Discharge Act, 24 V.I.C. § 76, enumerates only nine reasons for which an employer may lawfully discharge an employee — confirming the territory is not an at-will jurisdiction.
24 V I C § 76 (the Virgin Islands Wrongful Discharge Act enumerating only nine reasons for which an employer may lawfully discharge an employee after qualifying for protection under the statute)
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019) (citing 24 V.I.C. § 76).
Case law · 2019-09-10
E.3 Arvidson v. BucharArvidson's recognition that the Wrongful Discharge Act allows discharge for only nine enumerated reasons supports the caution that continued employment may add little value as consideration, favoring fresh independent consideration for a mid-employment covenant.
24 V I C § 76 (the Virgin Islands Wrongful Discharge Act enumerating only nine reasons for which an employer may lawfully discharge an employee after qualifying for protection under the statute)
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019) (citing 24 V.I.C. § 76).
Will a court narrow an overbroad covenant, or void it entirely?
Arvidson chose equitable reformation as the soundest rule for Virgin Islands non-competes, rejecting both the rigid blue-pencil rule and the all-or-nothing approach . But the court adopted reformation with an express greater willingness to refuse to reform agreements that are not reasonable on their face , and it declined to rewrite the covenant in front of it because that clause had no time, place, or scope limit to salvage. An employer therefore cannot assume a court will rescue an overbroad clause.
Draft to the narrowest defensible scope from the start. Reformation is theoretically available in the Virgin Islands, but Arvidson applies it strictly — a court is reluctant to rewrite an agreement that is not reasonable on its face or that would require supplying essential terms . A clause with no reasonable core to enforce risks losing entirely, as both Arvidson and the older Dixon decision show .
A savings or step-down clause may improve the odds of partial enforcement, but only if enough reasonable terms already exist for a court to enforce without effectively writing a new covenant. The safer assumption is that the covenant as drafted is the covenant the court will judge.
Sources for this answer
Case law · 2019-09-10
F.1 Arvidson v. BucharArvidson adopted equitable reformation — not the blue-pencil rule and not all-or-nothing voiding — as the soundest rule for Virgin Islands covenants not to compete.
the soundest rule for the Virgin Islands is the equitable reformation approach
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).
Case law · 2019-09-10
F.2 Arvidson v. BucharArvidson applies reformation strictly, implementing it with a greater willingness to refuse to reform covenants that are not reasonable on their face — so an overbroad clause with no reasonable core is at risk of being voided rather than narrowed.
Accordingly, the Court implements this rule with a greater willingness to refuse to reform agreements that are not reasonable on their face
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).
Case law · 1983-10-07
F.3 V.I. Diving Schools/Supplies, Inc. v. DixonPDFV.I. Diving Schools v. Dixon voided an overbroad covenant as an unreasonable restraint against public policy — an example of the outcome when a covenant has no reasonable core for a court to enforce.
restrictive clauses of the agreement are void and unenforceable as against public policy on the ground that they are unreasonable restraint on competition.
See V.I. Diving Schools/Supplies, Inc. v. Dixon, Civ. No. 1046/1982 (Terr. Ct. V.I. Oct. 7, 1983).
Does the restricted period toll or extend if the employee breaches?
No Virgin Islands statute or decision addresses tolling — whether the clock pauses, or the restricted period is extended, while a former employee is violating the covenant or litigation is pending. This is an open question in the territory .
Treat any tolling or extension-on-breach clause as untested in the Virgin Islands. Because the controlling test asks whether the total restraint is reasonable in duration , an extension that lengthens the covenant well beyond its stated term could itself be challenged as unreasonable. If you include a tolling clause, cap the maximum extension and keep the underlying period conservative so the worst-case total still looks reasonable.
Because there is no on-point authority, a Virgin Islands court asked to enforce a tolling provision would likely reason from the same reasonableness principles that govern duration generally, and from persuasive mainland authority — but the outcome cannot be predicted with confidence.
Sources for this answer
Case law · 2019-09-10
G.1 Arvidson v. BucharArvidson assesses reasonableness, including duration, as a fact-intensive weighing of the totality of the circumstances — the lens a court would bring to a tolling or extension-on-breach clause, which no Virgin Islands authority addresses directly.
reasonableness is a fact intensive inquiry that depends on weighing the totality of the circumstances
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).
If a non-compete is shaky, what protects trade secrets and confidential information?
The Virgin Islands has adopted the Uniform Trade Secrets Act, which gives an employer a statutory remedy for misappropriation independent of any covenant . It defines a trade secret broadly , preserves contractual remedies alongside the Act , and the evidence code adds a privilege to resist disclosing trade secrets in litigation .
This matters because trade-secret and confidentiality protection does not depend on the reasonableness test that makes non-competes hard to enforce. The Act both displaces conflicting common-law misappropriation remedies and preserves contractual ones, so a confidentiality agreement and the statutory claim work together . A narrowly drafted confidentiality and trade-secret program is often the more durable protection in the territory, and Dixon shows the risk of relying on a covenant without a documented protectable interest — the employer there failed to prove any trade secret worth protecting .
Sources for this answer
Primary law
H.1 11 V.I.C. § 1001 — Uniform Trade Secrets Act (short title)The Virgin Islands has enacted the Uniform Trade Secrets Act, 11 V.I.C. §§ 1001 et seq., providing a statutory misappropriation remedy that does not depend on a non-compete covenant.
This chapter may be cited as the Uniform Trade Secrets Act.
See 11 V.I.C. § 1001.
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H.2 11 V.I.C. § 1002 — Definitions11 V.I.C. § 1002 defines a trade secret broadly to include any information that derives independent economic value from not being generally known and is the subject of reasonable efforts to keep secret.
"Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process
See 11 V.I.C. § 1002.
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H.3 11 V.I.C. § 1008 — Effect of other law11 V.I.C. § 1008 displaces conflicting common-law misappropriation remedies but expressly preserves contractual remedies alongside the Uniform Trade Secrets Act, so a confidentiality agreement and the statutory misappropriation claim can operate together.
This chapter does not affect: (1) contractual remedies, whether or not based upon misappropriation of a trade secret
See 11 V.I.C. § 1008.
Primary law
H.4 5 V.I.C. § 858 — Trade secrets privilege5 V.I.C. § 858 gives the owner of a trade secret an evidentiary privilege to refuse and to prevent disclosure, subject to protective measures and a fraud/injustice limit.
A person has a privilege which may be claimed by him or his agent or employee, to refuse to disclose and to prevent other persons from disclosing a trade secret, owned by him, if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice.
See 5 V.I.C. § 858.
Case law · 1983-10-07
H.5 V.I. Diving Schools/Supplies, Inc. v. DixonPDFIn Dixon the employer presented no evidence of any protectable trade secret, one part of the court's conclusion that it had not shown a legitimate interest worth protecting — illustrating why a documented protectable interest matters more than the covenant itself.
Plaintiff Virgin Islands Diving Schools presented no evidence of any trade secrets which the Defendants obtained that is worthy of protection.
See V.I. Diving Schools/Supplies, Inc. v. Dixon, Civ. No. 1046/1982 (Terr. Ct. V.I. Oct. 7, 1983).
Can an overbroad covenant run afoul of the Virgin Islands Antimonopoly Law?
It may supply an additional, untested ground of attack. The Virgin Islands Antimonopoly Law makes it a violation to unreasonably restrain trade or commerce by contract, combination, or conspiracy . An employee challenging a sweeping covenant — especially in a small market where the restraint could foreclose competition — might invoke that statute alongside the common-law reasonableness defense.
This is a secondary tool rather than the main event, and an untested one: the statute's concerted-action language (combination or conspiracy with one or more other persons) fits horizontal market conduct more naturally than a two-party employment covenant, and no Virgin Islands case has applied § 1503 to an employee non-compete. The day-to-day enforceability question is decided under the Arvidson reasonableness test. But the statute reinforces why a covenant that goes beyond protecting a legitimate interest is vulnerable, because the same overreach that fails the reasonableness test can also look like an unreasonable restraint of trade.
Sources for this answer
Primary law
I.1 11 V.I.C. § 1503 — Violations enumeratedThe Virgin Islands Antimonopoly Law, 11 V.I.C. § 1503, makes it a violation to unreasonably restrain trade or commerce by contract, combination, or conspiracy — a potential, as-yet-untested statutory hook against an overbroad restrictive covenant, whose concerted-action language fits horizontal conduct more naturally than a two-party employment covenant.
By contract, combination, or conspiracy with one or more other persons unreasonably restrain trade or commerce
See 11 V.I.C. § 1503.
How are non-solicits, NDAs, and sale-of-business or LLC covenants treated?
An employee non-solicit that restrains competitive activity should be drafted to satisfy Arvidson's reasonableness principles, because a restraint dressed up as a non-solicit is still a partial restraint of trade . Confidentiality and trade-secret clauses are supported separately by contract law and the Uniform Trade Secrets Act rather than by the non-compete test — though an overbroad confidentiality clause that operates as a de facto non-compete may draw similar scrutiny. Entity-governance covenants have a clear statutory foothold: the LLC statute expressly contemplates a court-ordered covenant not to compete as a term of a member buyout .
Broader sale-of-business covenants should still be analyzed under the same reasonableness principles. Mainland practice often treats a seller or departing owner who is paid for goodwill more favorably than an ordinary employee, because the legitimate interest is stronger and the hardship is offset by the purchase price — but in the Virgin Islands that more-favorable treatment is an inference from common-law context, not a territorial appellate holding. A sale-of-business covenant is still measured for reasonable duration, area, and scope, and a worldwide restraint on a Virgin Islands business will draw the same skepticism a worldwide employee covenant would.
Sources for this answer
Case law · 2019-09-10
J.1 Arvidson v. BucharArvidson's reasonableness rule governs partial restraints of trade generally, so a non-solicitation covenant that restrains competitive activity is judged by the same ancillary, consideration, protectable-interest, and reasonable-scope requirements as a non-compete.
a contract which is only in partial restraint of trade may be valid and enforceable when it
See Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).
Primary law
J.2 13 V.I.C. § 1702 — Court action to determine fair value of distributional interest13 V.I.C. § 1702 lets a court set the terms of an LLC member buyout, expressly including a covenant not to compete or other restriction on a dissociated member — confirming entity-governance covenants are contemplated by Virgin Islands law.
a covenant not to compete or other restriction on a dissociated member
See 13 V.I.C. § 1702.
Does the federal FTC non-compete ban apply, and which court decides a dispute?
No. The Federal Trade Commission's 2024 Non-Compete Rule never took effect — a federal court set it aside, the FTC acceded to that result, and the Commission has now removed the rule from the Code of Federal Regulations . Virgin Islands non-compete disputes are governed by territorial common law and decided in the first instance by the Superior Court, with appeals to the Supreme Court of the Virgin Islands and a separate federal track in the District Court of the Virgin Islands.
Do not rely on guidance — including parts of the 2024–2025 commentary — that treats the FTC ban as live. As of February 2026 the rule has been removed from the CFR and is not operative ; enforceability turns entirely on Virgin Islands law. Separately, the FTC may still challenge individual covenants case-by-case under its general authority, but there is no across-the-board federal ban.
For planning, the audience that matters is a Virgin Islands judge applying the Arvidson reasonableness test — not a federal rule. Where a dispute lands in the District Court on diversity or federal-question grounds, that court still applies Virgin Islands substantive law, informed by Third Circuit procedure.
Sources for this answer
Primary law · 2026-02-12
K.1 Removal of the Non-Compete Rule from the CFRThe FTC has removed its 2024 Non-Compete Rule from the Code of Federal Regulations after the rule was vacated and the Commission acceded to that vacatur, so there is no operative federal non-compete ban.
this final rule removes the Non-Compete Rule codified at 16 CFR part 910 from the Code of Federal Regulations
See Removal of the Non-Compete Rule, 91 Fed. Reg. 6507 (Feb. 12, 2026).