Primarily Intended to Stop Employees from Seeking Work Elsewhere
Years ago, employment
agreements that contain what are known as restrictive covenants, that is
confidentiality, non-solicitation and non-competition clauses, were somewhat
rare. Now, they are everywhere.
Over the years, the courts have made
some basic and essential rulings that govern construction of restrictive
covenants, and it is fairly easy to determine the circumstances under which such
clauses will be enforceable.
Currently, it remains relatively easy to attract qualified candidates for employment even where requiring the candidate to sign an employment agreement containing restrictive covenants is the rule. However, we have noticed a trend over recent years where highly-qualified candidates are pushing back and refusing to accept a job if they are required to sign contracts that greatly limit their future vocational mobility. In many cases, a reciprocal severance package will be required (i.e. “I will agree not to compete for 6-months if you agree to pay me 6-months severance if you fire me without cause”).
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| Is the Goal to Attract and Retain High Quality Individuals? |
Currently, it remains relatively easy to attract qualified candidates for employment even where requiring the candidate to sign an employment agreement containing restrictive covenants is the rule. However, we have noticed a trend over recent years where highly-qualified candidates are pushing back and refusing to accept a job if they are required to sign contracts that greatly limit their future vocational mobility. In many cases, a reciprocal severance package will be required (i.e. “I will agree not to compete for 6-months if you agree to pay me 6-months severance if you fire me without cause”).
What
is the Best Method to Make Sure New Employees Agree to Non-Compete Agreements
One way that employers attempt to get
around this is by not informing the employee of the existence of the
requirement that they execute an employment agreement containing restrictive
covenants until after they are very been onboarded. Another approach is to
include restrictive covenants within an employee handbook, and to have the
employee sign off on the handbook during orientation.
While these methods may enable an
employer to successfully bind a new employee to the said restrictive covenants,
is that really the way you want to start off your employment relationship?
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| How Do You Want to Start New Relationship? |
There is a better way, and it will
improve your candidate pool, and your workforce.
Are
Confidentiality, Non-Compete and Non-Solicitation Clauses Valid and Enforceable
in Pennsylvania?
The following rules that generally exists
in Pennsylvania (and throughout much of the United States):
1) courts will always enforce confidentiality agreements if they find that the employee has taken the former employer’s documents and information with them upon departure from employment, and has used that confidential information in an overt fashion in their new endeavor.
2) unless the employee has engaged in such nefarious conduct where confidential information is concerned, the courts consider very little employer information to be actually confidential. For example, and generally speaking, customer names, addresses, employer pricing, etc. are not deemed confidential under Pennsylvania law because they are generally available to the public at large upon research via the phone book, Google etc.
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| TRUE Trade Secrets Are Rare Under Pennsylvania Law |
1) courts will always enforce confidentiality agreements if they find that the employee has taken the former employer’s documents and information with them upon departure from employment, and has used that confidential information in an overt fashion in their new endeavor.
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| Courts Will Not Tolerate Workers Who Misappropriate Their Former Employer's Materials and Information in a New Business Endeavor, Whether a Trade Secret or Not |
2) unless the employee has engaged in such nefarious conduct where confidential information is concerned, the courts consider very little employer information to be actually confidential. For example, and generally speaking, customer names, addresses, employer pricing, etc. are not deemed confidential under Pennsylvania law because they are generally available to the public at large upon research via the phone book, Google etc.
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| Now THAT'S a Trade Secret!!! |
4) where non-competition clauses are
concerned, the court similarly will not enforce them unless there is some
evidence that the employee has engaged in nefarious conduct. For example, if an
employee solicits former customers of his or her former employer while working
for the new employer, the non-compete will almost certainly be enforced. Or, if
the employee should use confidential information overtly while working for the
new employer, there is a good chance the non-compete will be enforced as well.
Where, however, there is no evidence that the employee has special knowledge,
or is done anything wrong, courts will not generally require (i.e. order) an
employee to quit a new job working for a competitor merely because they
executed a non-competition agreement.
5) non-solicitation clauses are at the
heart and soul of what is enforceable in Pennsylvania and elsewhere where
restricting employee’s rights to future employment are concerned. An employee bound
by a non-solicit who departs one employer, whether via termination or
resignation, and then goes to work for a new company, or even start a new
company, and thereafter solicits clients/customers the employee serviced while
employed with the former employer, will be enjoined from continuing such
conduct by most Pennsylvania courts.
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| You Were Paid to Get to Know Your Former Employer's Clients and Customer Base - Soliciting Them After You Leave is a BAD Idea and Courts Will Not Allow That |
Cost-Effective
Employment Agreements Containing Confidentiality, Non-Competition and Non-Solicitation
Provisions Prepared by Qualified Pennsylvania Employment Lawyers
Why limit the potential pool of candidates by requiring the
execution of a non-compete agreement when the employer’s true, legitimate
business interests can be preserved by will appropriate confidentiality and non-solicitation
clauses?
Preparing an employment agreement that at
once protects the interest of the employer but at the same time does not seem
overbearing and overly restrictive from the employee’s perspective is key to
attracting qualified employment candidates. The preparation of such agreements
can be done in a cost-effective, low cost fashion by a qualified employment
lawyer who has prepared, negotiated and/or litigated hundreds of such
agreements in the past.
HERE
ARE SOME OTHER ARTICLES YOU MAY FIND WORTHWHILE:
Are Non-Compete Agreements
Enforceable in Pennsylvania? How Can I Negotiate a Non-Compete?
Non-Compete Agreements -
Legally Enforceable or Not, Negotiation is Often the Key
What State's Law Applies to My
Employment Contract? What is a Choice of Law Provision?
Recruiters and Non-Compete Agreements in
Pennsylvania
IT Consultants, Personnel Recruiters and
Non-Compete - Non- Solicitation Agreements in Pennsylvania
610-647-5027
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