Non-Competition Agreements in Pennsylvania
When you first start out at a job, your new employer typically requires you to fill out a number of forms before you can start. While most of these forms are fairly basic and standard with every position, others are not as common, such as non-competition agreements.
For many, these agreements are the cause of a lot of stress. They’re long, they’re difficult to read, and many of them appear to require an advanced legal degree to understand.
While you can always take these forms to an attorney, most employers won’t give you enough time to do this. In a situation where it seems like your job depends on signing the agreement, it is common to cut your losses and sign without truly understanding what you are agreeing to.
Though this approach sometimes works out, other times, you aren’t so lucky and find yourself unable to pursue a different job down the road. If this seems like the situation of you or anyone you know, the dedicated employment lawyers at The Law Firm of Fenters Ward can help.
What is a Non-Competition Agreement?
A non-competition agreement (often referred to as a non-compete) is an agreement entered into to prevent an employee from utilizing training at his previous workplace in competition with his former employer.
While it is legal for an employer to require you to sign a non-compete, in general, non-competes are not favored in Pennsylvania.
Pennsylvania courts will only determine that a non-compete is enforceable if it is:
- Related to the employment relationship between the employee and employer;
- Supported by adequate consideration;
- The restrictions are reasonable limited in duration and geographic extent; and
- The restrictions are designed to protect the legitimate interests of the employer.
Only when these four things are present in the agreement will the non-compete agreement be enforceable in Pennsylvania.
Related to Employment Relationship
In Pennsylvania, for a non-compete to be enforceable, the agreement must contain a legitimate interest worthy of protection arising from a transaction or relationship between the two parties. In the scope of an employment relationship, non-competes can usually meet this element so long as the agreement has to do with the working relationship of the employer and employee.
If this agreement is unrelated to your working relationship, such as having nothing to do with the type of work that you are being hired for, this element cannot be met. The non-compete agreement would not be valid, and thus, is not binding.
Consideration is a legal term that essentially refers to a benefit which must be bargained for between the parties and is the essential reason for a party entering into a contract. In other words, consideration is the result of a promise to do something or a promise not to do something.
As is the case with any contract or agreement, if there was no consideration prior to signing, the agreement is not valid. That means that it cannot be enforced, and Pennsylvania courts will not enforce the non-competition agreement.
Duration and Geographic Extent
What can be considered reasonably limited is determined on a case-by-case basis. Pennsylvania courts determine that the duration and geographic extent is reasonable if they are reasonably necessary for the employer without imposing an undue hardship on the employee.
However, Pennsylvania courts have not been consistent on what is a reasonable geographic distance. In the past, geographic distances of fifty miles, 100 miles, and even across state lines have been considered reasonable.
Reasonableness for duration of the non-compete is also circumstantial and not consistent across courts. Pennsylvania courts have determined that durations anywhere from one year to five years are reasonable.
If you have a question about the reasonableness of the length of time or distance a non-compete that you have signed imposes, don’t hesitate to reach out. Our dedicated employment lawyers will be happy to advise you regarding this matter.
Legitimate Business Interests
In Pennsylvania, non-competition agreements are only enforceable when they are necessary for the protection of the legitimate business interests of the employer. Legitimate business interests that fall under the protection of a non-compete include:
- Trade secrets;
- Confidential information; and
- Unique or extraordinary skills.
If a non-compete does not protect one of these three types of legitimate business interests, then the non-compete itself is not enforceable. If you think that this may be the case for a non-compete that you or someone you know signed, we at the Law Firm of Fenters Ward can help!
Even if a non-competition agreement is able to meet all four of these necessary elements, Pennsylvania courts are still hesitant to enforce them. To determine whether the agreement is actually enforceable, the courts use a balancing test.
In this balancing test, the courts balance the protectable business interests of the employer against the employee’s interest in earning a living in the trade, profession, or occupation in question.
Courts further weigh this interest against the interests of the public. Essentially, would it be good public policy to allow this or similar agreements to be enforceable?
What this Means for Employees
This balancing test is helpful for employees trying to get out of a non-competition agreement they previously signed. Pennsylvania courts generally disfavor non-competition agreements because they put significant strain on employees when searching for a new position.
Because they prevent employees from utilizing past experience in a new position, Pennsylvania courts view non-competes as negatively impacting the employee’s ability to earn a living. Courts especially
So what does this mean for you as an employee? If you signed a non-competition agreement with a previous job and now you are having trouble finding new work, you may be entitled to recovery. There is a good chance that the court will find the non-competition agreement null and void.
We Can Help!
If you or someone you know is having trouble finding work because of a non-competition agreement you signed with a former employer, you do have options. The dedicated employment law attorneys at The Law Firm of Fenters Ward are here to provide you with information about your rights and options under Pennsylvania law. We can be reached by filling out this contact form or by calling 877-259-WARD.
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