Are Non-Compete Agreements Enforceable in Pennsylvania?
At some point in your career you may be asked, or required, to sign a non-compete agreement for a prospective or current employer. All too often an employee signs a non-compete agreement without really paying attention to the often complex and verbose language contained within the agreement. It isn’t until the employer-employee relationship ends that an employer notices how restrictive the provisions in the agreement actually are and how those provisions limit the employee’s immediate employment options. If you find yourself confined on the job front because of a non-compete agreement you signed with a former employer you may be wondering “Are non-compete agreement enforceable in Pennsylvania?”
A non-compete agreement, also referred to as a “restrictive covenant” is an employment agreement that typically restricts an employee’s future employment opportunities should the employee no longer work for the employer. The rationale for allowing non-compete agreements at all is that an employer has a right to protect its business interests by preventing certain employees from leaving and either taking with them confidential information and/or business secrets or leaving and opening up a similar business that competes with the previous employer. A non-compete agreement can be enforceable; however, the general consensus among courts in Pennsylvania is that these agreements are not favored and, therefore, are heavily scrutinized when determining enforceability.
Whether or not a specific non-compete agreement is enforceable is something that must be determined on a case by case basis; however, there are three factors that are typically required for a court to even consider enforcing one:
·The agreement must be incident to an employment relationship between the employer and employee
·The restriction imposed must be reasonably necessary for the protection of the employer's business interest
·The restrictions imposed must be reasonably limited in duration and geographic area.
The most common scenarios in which a court decides not to uphold a non-compete agreement involve those in which the court finds that there is not a true business interest to protect or those in which the restrictions placed on the employee are far more restrictive than is necessary to accomplish the goal of protecting the employer’s interests. For example, if the employee was not a key employee, was not privy to confidential information, and was ultimately terminated without cause by the employer the court would likely find that the employer’s need for protection is minimal at best. Likewise, if the agreement forbids the employee from working in his/her field anywhere in the country the court would likely find that to be overly broad in geographic area absent a compelling argument from the employer as to why such a broad restriction is necessary to protect the employer’s interests.