Non-compete agreements, also known as restrictive covenants, have been a source of controversy and debate in Pennsylvania and many other states for years. These agreements are often included in employment contracts and are designed to prevent an employee from working for a competitor or starting a competing business for a set period after leaving their current employer. Pennsylvania law allows for the use of non-compete agreements in certain circumstances, but imposes strict limitations on their scope and enforceability.
Under Pennsylvania law, non-compete agreements are only enforceable if they are designed to protect an employer`s legitimate business interests. This means that the restrictions imposed by the agreement must be reasonably necessary to protect the employer`s confidential information, trade secrets, customer relationships, or other legitimate business interests. Employers cannot use non-compete agreements to simply prevent employees from seeking better employment opportunities or to unfairly restrict competition in the marketplace.
Another key limitation of non-compete agreements under Pennsylvania law is their duration. The agreement must be limited in time and scope, meaning that it cannot prevent an employee from working in their chosen field for an extended period or in a broad range of jobs or industries. The duration of a non-compete agreement should be limited to the time necessary to protect the employer`s legitimate business interests.
Pennsylvania law also requires employers to provide employees with valuable consideration in exchange for agreeing to a non-compete agreement. This consideration could come in the form of a signing bonus, increased salary or benefits, or access to proprietary information or training programs. Without valuable consideration, the non-compete agreement may not be enforceable under Pennsylvania law.
Employers who attempt to enforce overly restrictive or unfair non-compete agreements may face legal action from employees. Pennsylvania courts have been known to strike down non-compete agreements that are deemed to be unreasonable or that impose undue hardship on employees.
In summary, non-compete agreements are allowed under Pennsylvania law, but they must be carefully drafted to comply with strict limitations on their scope and enforceability. Employers should be sure to consult with an experienced attorney to ensure that their non-compete agreements are legally enforceable and designed to protect their legitimate business interests. As with any legal issue, it is important to fully understand the law and how it applies to your specific situation before taking any action.