This form is a Post-Employment Restrictions on Competition for use with exiting employees exposed to commercial trade secrets or other confidential information as part of their job. This form includes a Noncompetition Covenant as well as other relevant clauses, such as a Savings Clause, a Consulting Option, and an Assignment Clause, that can be integrated into any agreement with the former employee.
Pennsylvania Post-Employment Restrictions on Competition: Understanding Non-Compete Agreements Post-employment restrictions on competition, often referred to as non-compete agreements or restrictive covenants, are legal provisions commonly employed by employers to protect their business interests after an employee leaves the company. In Pennsylvania, the enforcement of such agreements is governed by specific laws and regulations to ensure fair treatment of both employers and employees. In this article, we provide a detailed description of Pennsylvania's post-employment restrictions on competition, covering different types of non-compete agreements and their key aspects. 1. General Overview: Pennsylvania recognizes and generally upholds the enforceability of post-employment restrictions on competition if they are deemed reasonable in terms of geographic scope, duration, and the extent of restrictions imposed on the employee. 2. Types of Non-Compete Agreements: a. Non-Compete Agreements: These agreements aim to prohibit former employees from engaging in a similar line of work or joining a competing business within a specific geographic area and for a limited period after leaving the employer. b. Non-Solicitation Agreements: Unlike non-compete agreements, which broadly cover competition, non-solicitation agreements primarily focus on preventing solicitation of the employer's clients, customers, or employees by the former employee. c. Non-Disclosure Agreements: These agreements aim to protect an employer's confidential and proprietary information from being disclosed or used by the former employee in a manner that harms the employer's business. 3. Reasonableness Factors: To be enforceable, Pennsylvania courts consider various factors to assess the reasonableness of post-employment restrictions on competition. These factors include: a. Geographic Scope: The restriction's geographic limitation should be reasonable and reasonably necessary to protect the employer's legitimate business interests. An excessively large geographic scope may render the agreement unenforceable. b. Duration: The time period of the restriction should be reasonable and directly related to the employer's need to protect its interests. Duration exceeding two years may be less likely to be upheld unless exceptional circumstances exist. c. Nature of the Business: Courts evaluate the nature of the employer's business when determining the reasonableness of the restrictions imposed. Restrictions must be reasonably necessary for the protection of the employer's interests in light of the specific industry and trade. 4. Restrictions on Professionals: Pennsylvania law often applies stricter scrutiny to post-employment restrictions on professionals, such as doctors, lawyers, and accountants. Courts may be more inclined to limit the scope of non-compete agreements due to public policy concerns related to ensuring access to professional services. 5. Key Exceptions and Invalid Clauses: Certain circumstances and professions exempt employees from post-employment restrictions. For example, non-compete agreements may not be enforceable against low-wage employees or those whose employment was terminated without their misconduct. Additionally, if a non-compete agreement contains invalid clauses, such as overly broad restrictions or unreasonable terms, Pennsylvania courts may modify the agreement to make it reasonable and enforceable. In conclusion, Pennsylvania's post-employment restrictions on competition, including non-compete, non-solicitation, and non-disclosure agreements, aim to protect employers' legitimate business interests. However, the enforceability of these agreements hinges on factors such as geographic scope, duration, and reasonableness. It is essential for employees and employers to understand their rights and obligations under these agreements and seek legal advice if any dispute arises.
