Non-compete agreements, also called restrictive covenants, are often found in employment contracts, or in some instances, employees are required to sign separate documents which have non-compete or non-solicitation agreements. Employers may ask an employee to sign these agreements and this creates a contract where the employee agrees to certain stipulations. These agreements generally prevent an employee from leaving one employer and going to work for another in the same field. Employers also use these agreements to attempt to protect business interests like trade secrets and other confidential information. There are several different ways that non-compete agreements impact an employee once an employee leaves a business. If the employee finds another job, the former employer may have a claim or file a lawsuit against the employee to attempt to force the former employee to quit the new job. If an employee takes a position which the former employer believes is in violation of a non-compete agreement, it may sue the employee seeking a court order to prevent the employee from working. An employer must show that the employee has in fact taken or threatened to take an action in violation of the non-compete agreement. Pennsylvania courts have generally found non-compete agreements to be enforceable if the agreement is incident to an employment relationship between the employer and employee; the restriction imposed is reasonably necessary for the protection of the employer’s business interest; and the restrictions imposed are reasonably limited in duration (time) and geographic area. Despite this, the Pennsylvania Supreme Court has made it clear that non-compete agreements and restrictive covenants are not favored in Pennsylvania and are viewed as a trade restraint that prevents a former employee from earning a living. As a consequence, courts scrutinize restrictive covenants in employment agreements to determine whether the burden placed on the former employee is unreasonable. Even when courts decide to enforce an agreement, when an employer imposes restrictions broader than necessary to protect the employer, courts may limit restrictions to those that are reasonably necessary for the protection of the employer. We frequently consult with clients when issues arise concerning Non-Compete Agreements, Restrictive Covenants, Trade Secrets, Non-Solicitation Agreements and Preliminary Injunctions. If you have any questions or concerns, please reach out to Sarah at [email protected]
