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Can an Employer Enforce a Non-Compete Agreement?

If you are considering signing a non-comped agreement, or asking your employees to sign one, you should talk with a Philadelphia employment lawyer. Non-compete agreements are a very common legal tool in a wide variety of different professions. Non-competes can help to protect an employer's interests  by making sure that workers do not take their customers and start their own business. Non-competes can also protect a company's trade secrets by preventing a worker from going to competitors. 

While non-competes are common, they are also difficult to enforce in many circumstances. Non-compete agreements can sometimes be overly restrictive and can impede a person's ability to make a living. This type of agreement is not going to be enforced because it is considered bad public policy and an unlawful restraint on trade to make it effectively impossible for someone to earn a living in his or her chosen profession.

If you want to make certain that a non-compete agreement that you ask your employees to sign is an agreement that you can actually enforce under Philadelphia law, you should consult with a Philadelphia employment lawyer in drafting the agreement. If you have an agreement in place and you believe that your employee is violating that agreement, you should also get legal help understanding both if you can make a case against the employee and also in how to make that case so you can stop the damage to your business.  Curley & Rothman, LLC has helped many companies with issues related to non-compete agreements. We can represent both employees and employers when legal issues arise regarding this particular type of contractual agreement.

Can An Employer Enforce a Non-Compete Agreement?

According to PBS, around 40 percent of Americans have signed a non-compete agreement so this type of contract is very common, although not always enforceable.

There are a number of different factors in determining whether or not an employer can enforce a noncompete agreement or not. One of these factors relates to an important issue in all contract cases: consideration.  Consideration is required for a contractual agreement to be valid. Consideration essentially means that a bargained-for / exchange took place. Something of value must have been given by both parties. If there is no consideration, then a contract is not valid.

If an employee is asked to sign a noncompete when the employee gets hired for the first time, usually there is no question over whether or not consideration exists. The noncompete at this time is usually part of a more comprehensive employment contract and there is a bargained for exchange in which the employee gets something (a job, and enumerated benefits of that job) in exchange for his or her agreement not to work for competitors.

If an employer approaches an existing employee, however, and asks that employee to sign a noncompete agreement but does not offer that employee anything at all in return for signing the contract, then there is no bargained for exchange or no exchange of things of value. The employee is giving up something of value, but the employer is not. Pennsylvania law will not consider a noncompete valid under these circumstances, although certain other states will recognize the validity of a noncompete even when no new consideration is given.

Because of the need for consideration, employers should strongly consider having new hires sign non-compete agreements when they are first brought into the company.

Other Important Factors in Enforcing Non-Compete Agreements

While consideration is necessary, it is not the only factor that matters in determining whether or not a non-compete agreement will or will not be enforced. The courts also will consider whether a noncompete is a reasonable agreement necessary to protect an employer's interests or whether the agreement is overly burdensome, an unlawful restraint on trade, and an agreement that effectively makes it impossible for an employee to find new work.

The court will consider things like the time, place, and scope of the noncompete in deciding whether or not to enforce an agreement. If the non-compete is limited in the amount of time the employee is restricted from working for a competitor, and if it only provides restrictions on working for competitors within a reasonable geographic area, then it should generally be enforced as long as it is not so overly broad as to prevent a worker from getting any job in his field.

Getting Help from a Philadelphia Employment Lawyer

Curley & Rothman, LLC will provide invaluable help to employees and employees in understanding noncompetes and in determining their enforceability. We can also represent you in court in arguing for or against the enforcement of a noncompete agreement. Call today at 610-834-8819 or contact us  online to talk with a Philadelphia employment lawyer to find out more.