Thursday, January 13, 2011

Non-Compete Agreements in Pennsylvania - The Basic Test

Remedies for an Existing Non-Compete Agreement

Non-compete agreements are utilized by employers to prevent key employees from going over to the competition, and to prevent those with intimate client contact from taking those clients with them to a new employer (or on their own venture). The contracts limit the ability of the employee to pursue comparable jobs in the same field after the employment relationship has been terminated.

The most common provisions are non-solicitation clauses, which  limit the employee's right to call on specific customers, and non-compete clauses, which limit the employee's right to work for certain companies. They commonly restrict the employee for a specified period of one to several years.

In Pennsylvania, the key provision is the non-solicitation provision.  Courts don't get too concerned if Joe or Jane Doe left to join a competitor unless they are possession of some unique information (think: Coca Cola formula, Thomas English Muffin recipe).  They do, however, become quite concerned if Bill or Bonnie Average take customers away from their former employer after they leave to join a competitor or to start a new venture on their own. 

Here is the basic test:  if you leave your former employer and engage in activity that your former employer can prove caused it to lose money (think: loss of a customer), then your former employer will have an excellent chance of getting your non-compete enforced (think: get an injunction stopping you from doing what you are doing).

Of course, all of this presupposes that your non-compete agreement is enforceable.  There are a number of rules that govern such an issue.  We have in the past and will in the future Blog more on that issue in the future. Click Here to find one Blog that provides an overview of the basic rules concerning what is required to create an enforceable Non-Compete Agreement in Pennsylvania.
Prior to Signing a Non-Compete

A non-compete agreement can be particularly devastating to salespersons, licensed professionals or employees with prized skills. Therefore, you should think carefully about your future before you sign one.  If you are thinking of leaving your current employer for greener pastures, and you are bound by a non-compete, you may want to seek legal counsel to establish the best strategy for minimizing your risk in doing so.

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