# Non-Competes in the U.S. Virgin Islands[^about] The U.S. Virgin Islands may enforce a reasonable non-compete but has no statute on point; the Superior Court in Arvidson v. Buchar judges covenants under an indigenous common-law reasonableness test selected through the Banks methodology, and a small-island economy plus a no-at-will Wrongful Discharge Act make aggressive restraints hard to enforce. ## Are employee non-compete agreements enforceable in the U.S. Virgin Islands? {#employee-noncompetes} **Short answer.** 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 [^arvidson-enforceable]. 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 [^vic-1-4]. A covenant that would survive comfortably in a blue-pencil state still carries genuine first-impression risk in the territory. ## What test does the Superior Court apply to a Virgin Islands non-compete? {#governing-test} **Short answer.** 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 [^arvidson-rule]. Reasonableness is then measured against five factors the court drew from earlier Virgin Islands case law [^arvidson-factors]. 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: "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?"[^arvidson-factors] 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 [^arvidson-factintensive]. 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. ## If there is no statute, where does the non-compete rule come from? {#common-law-source} **Short answer.** 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 [^banks-section4]. 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 [^banks-method], and in *Connor* it set out the three-factor analysis Virgin Islands courts use to choose a rule [^connor-factors]. 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. "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."[^banks-method] 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: "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.’"[^connor-factors] 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. ## How do courts judge a covenant's duration, geographic area, and scope? {#duration-geography-scope} **Short answer.** 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 [^arvidson-scope]. 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 [^dixon-void]. 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. "restrictive clauses of the agreement are void and unenforceable as against public policy on the ground that they are unreasonable restraint on competition."[^dixon-void] 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. ## What consideration supports a Virgin Islands non-compete, and is continued employment enough? {#consideration} **Short answer.** *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 [^arvidson-consideration]. 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 [^arvidson-wda], so the mainland argument that an employer gives value by merely refraining from firing is weaker here. > [!NOTE] > **Practice note.** > > 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 [^q5-arvidson-wda]. 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. ## Will a court narrow an overbroad covenant, or void it entirely? {#overbroad-narrowing} **Short answer.** *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 [^q6-arvidson]. But the court adopted reformation with an express *greater willingness to refuse to reform* agreements that are not reasonable on their face [^q6-arvidson-strict], 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. > [!CAUTION] > **Drafting note.** > > 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 [^q6-arvidson-strict]. A clause with no reasonable core to enforce risks losing entirely, as both *Arvidson* and the older *Dixon* decision show [^q6-dixon]. 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. ## Does the restricted period toll or extend if the employee breaches? {#tolling} **Short answer.** 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 [^q7-arvidson]. > [!NOTE] > **Practice note.** > > 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 [^q7-arvidson], 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. ## If a non-compete is shaky, what protects trade secrets and confidential information? {#trade-secrets} **Short answer.** The Virgin Islands has adopted the Uniform Trade Secrets Act, which gives an employer a statutory remedy for misappropriation independent of any covenant [^vic-11-1001]. It defines a trade secret broadly [^vic-11-1002], preserves contractual remedies alongside the Act [^vic-11-1008], and the evidence code adds a privilege to resist disclosing trade secrets in litigation [^vic-5-858]. 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 [^vic-11-1008]. 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 [^dixon-notrade]. ## Can an overbroad covenant run afoul of the Virgin Islands Antimonopoly Law? {#antimonopoly} **Short answer.** 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* [^vic-11-1503]. 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. ## How are non-solicits, NDAs, and sale-of-business or LLC covenants treated? {#other-covenants} **Short answer.** 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 [^q10-arvidson]. 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 [^vic-13-1702]. 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. ## Does the federal FTC non-compete ban apply, and which court decides a dispute? {#ftc-and-courts} **Short answer.** 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 [^ftc-removal]. 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. > [!NOTE] > **Practice note.** > > 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 [^ftc-removal]; 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. [^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-06-03. License: CC BY 4.0. Steven Obiajulu, J.D. is admitted in New York, not U.S. Virgin Islands. This article synthesizes U.S. Virgin Islands primary law and is not legal advice from a U.S. Virgin Islands-admitted attorney. This article is for informational purposes only and does not create an attorney-client relationship. [^arvidson-enforceable]: **Arvidson v. Buchar** — "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" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).* [^vic-1-4]: **1 V.I.C. § 4 — Application of common law; restatements** — "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." *1 V.I.C. § 4.* [^arvidson-rule]: **Arvidson v. Buchar** — "In accordance, this Court similarly adopts the same rule of reasonableness" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).* [^arvidson-factors]: **Arvidson v. Buchar** — "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?" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).* [^arvidson-factintensive]: **Arvidson v. Buchar** — "reasonableness is a fact intensive inquiry that depends on weighing the totality of the circumstances" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).* [^banks-section4]: **Banks v. International Rental & Leasing Corp.** — "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." *Banks v. Int'l Rental & Leasing Corp., 55 V.I. 967 (V.I. 2011).* [^banks-method]: **Banks v. International Rental & Leasing Corp.** — "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." *Banks v. Int'l Rental & Leasing Corp., 55 V.I. 967 (V.I. 2011).* [^connor-factors]: **Government of the Virgin Islands v. Connor** — "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.’" *Gov't of the V.I. v. Connor, 60 V.I. 597 (V.I. 2014).* [^arvidson-scope]: **Arvidson v. Buchar** — "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" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).* [^dixon-void]: **V.I. Diving Schools/Supplies, Inc. v. Dixon** — "restrictive clauses of the agreement are void and unenforceable as against public policy on the ground that they are unreasonable restraint on competition." *V.I. Diving Schools/Supplies, Inc. v. Dixon, Civ. No. 1046/1982 (Terr. Ct. V.I. Oct. 7, 1983).* [^arvidson-consideration]: **Arvidson v. Buchar** — "is supported by valid consideration" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).* [^arvidson-wda]: **Arvidson v. Buchar** — "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)" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019) (citing 24 V.I.C. § 76).* [^q5-arvidson-wda]: **Arvidson v. Buchar** — "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)" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019) (citing 24 V.I.C. § 76).* [^q6-arvidson]: **Arvidson v. Buchar** — "the soundest rule for the Virgin Islands is the equitable reformation approach" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).* [^q6-arvidson-strict]: **Arvidson v. Buchar** — "Accordingly, the Court implements this rule with a greater willingness to refuse to reform agreements that are not reasonable on their face" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).* [^q6-dixon]: **V.I. Diving Schools/Supplies, Inc. v. Dixon** — "restrictive clauses of the agreement are void and unenforceable as against public policy on the ground that they are unreasonable restraint on competition." *V.I. Diving Schools/Supplies, Inc. v. Dixon, Civ. No. 1046/1982 (Terr. Ct. V.I. Oct. 7, 1983).* [^q7-arvidson]: **Arvidson v. Buchar** — "reasonableness is a fact intensive inquiry that depends on weighing the totality of the circumstances" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).* [^vic-11-1001]: **11 V.I.C. § 1001 — Uniform Trade Secrets Act (short title)** — "This chapter may be cited as the Uniform Trade Secrets Act." *11 V.I.C. § 1001.* [^vic-11-1002]: **11 V.I.C. § 1002 — Definitions** — "‘Trade secret’ means information, including a formula, pattern, compilation, program, device, method, technique, or process" *11 V.I.C. § 1002.* [^vic-11-1008]: **11 V.I.C. § 1008 — Effect of other law** — "This chapter does not affect: (1) contractual remedies, whether or not based upon misappropriation of a trade secret" *11 V.I.C. § 1008.* [^vic-5-858]: **5 V.I.C. § 858 — Trade secrets privilege** — "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." *5 V.I.C. § 858.* [^dixon-notrade]: **V.I. Diving Schools/Supplies, Inc. v. Dixon** — "Plaintiff Virgin Islands Diving Schools presented no evidence of any trade secrets which the Defendants obtained that is worthy of protection." *V.I. Diving Schools/Supplies, Inc. v. Dixon, Civ. No. 1046/1982 (Terr. Ct. V.I. Oct. 7, 1983).* [^vic-11-1503]: **11 V.I.C. § 1503 — Violations enumerated** — "By contract, combination, or conspiracy with one or more other persons unreasonably restrain trade or commerce" *11 V.I.C. § 1503.* [^q10-arvidson]: **Arvidson v. Buchar** — "a contract which is only in partial restraint of trade may be valid and enforceable when it" *Arvidson v. Buchar, 2019 VI SUPER 122 (Super. Ct. V.I. Sept. 10, 2019).* [^vic-13-1702]: **13 V.I.C. § 1702 — Court action to determine fair value of distributional interest** — "a covenant not to compete or other restriction on a dissociated member" *13 V.I.C. § 1702.* [^ftc-removal]: **Removal of the Non-Compete Rule from the CFR** — "this final rule removes the Non-Compete Rule codified at 16 CFR part 910 from the Code of Federal Regulations" *Removal of the Non-Compete Rule, 91 Fed. Reg. 6507 (Feb. 12, 2026).*