A non-competition agreement is a type of restrictive covenant that limits an employee’s job prospects after leaving an employer. Non-competition agreements generally prevent the employee from working for certain companies within a specific geographic area for a predetermined amount of time. This can be a harsh reality for an employee considering a job change. As a result, it is paramount to engage in a diligent review of all non-competition agreements.
HKM Employment Attorneys in Pittsburgh, Pennsylvania, is a widely recognized law firm in matters of labor and employment. Combining a nationwide presence with a deft local touch, HKM Employment Attorneys helps employees protect their rights and interests. If you have legal questions about employment law, contact us to get started immediately.
Reasonableness of Time, Scope and Geography
Unlike other U.S. states, Pennsylvania does not have an actual law that addresses non-competition agreements. The courts have confirmed the legality of non-competition agreements and other restrictive covenants. Not all restrictive covenants are valid and enforceable.
Specifically, the Pennsylvania courts ensure that a non-competition agreement is reasonable in time, scope and geography.
- Time: Non-competition agreements must have a defined endpoint and a reasonable length of restriction. For example, it is possible for restrict employees from direct competition for a year or two. It is normally unenforceable to prohibit employees from working for many years or decades.
- Scope: Non-competition agreements must have a fixed scope of prohibited activities and a rational connection to the employer. For example, it is possible to prevent employees from going to direct competitors. It is normally unenforceable to prohibit employees from working for other companies with loose connections to the employer.
- Geography: Non-competition agreements must feature a limited geography. For example, it is possible to restrict employees from competing within a defined area, such as a city. It is normally unenforceable to prohibit employees from working for any competitor across the country.
Consideration is Required for a Valid Non-Competition Agreement
The Pennsylvania courts require consideration for a valid non-competition agreement, in the same way as for other contracts. This means that employees must receive some kind of discernible benefit for entering into a non-competition agreement.
Consideration is easy to satisfy at the beginning of an employment relationship. The employee is receiving a job and defined compensation. That is a separate and valuable consideration in Pennsylvania. Consequently, non-competition agreements signed at employee hire can be valid and enforceable.
After the employee commences work, however, consideration becomes more complex. The Pennsylvania courts determined that continued employment does not qualify as separate and valuable consideration. Stated otherwise, the employer must provide some other benefit to entice existing employees to sign a new non-competition agreement.
Contact a Pittsburgh Employment Lawyer for Assistance
If you are an employee facing a non-competition agreement or similar restrictive covenant, it can be incredibly useful to speak with a knowledgeable employment attorney. HKM Employment Attorneys has a wealth of experience concerning non-competition agreements and other aspects of labor law. If you need legal help in this domain, contact us today for an initial consultation.