You signed an Agreement Not to Compete with your former employer. Can that former employer keep you from working at your new job?
Perhaps there is a Noncompetition and Confidentiality provision included with the employment contract that you had previously signed when you worked for your former employer. Or, maybe you did not sign an employment contract but you did sign something called “Agreement Not to Compete” when it was shoved at you for signature along with the other usual personnel documentation. Now you are ready to move on to a new job opportunity. Should you first review that Noncompetition and Confidentiality provision/Agreement Not to Compete that you signed with an attorney?
The answer is yes.
These agreements not to compete, often referred to as restrictive covenants, are not favored under Pennsylvania law, but courts can find such restrictive covenants to be enforceable. To be enforceable, a restrictive covenant needs to: 1) be entered pursuant to an employment situation; 2) be reasonably limited to a specific duration of time; 3) be reasonably limited to a definite geographic area; and 4) reasonably protect a legitimate business interest of the employer.
In addition to the four requirements listed above, some other factors relevant in analyzing the enforceability of a restrictive covenant include: Was the restrictive covenant signed at the outset of employment or after the employee started work? Is the former employee working for a competitor of his or her former employer? Is there evidence that the former employer is soliciting clients and customers of his or her former employer? Does the case involve a high-tech industry? Did the employee gain unique or specialized skills from training during the course of employment?
Because restrictive covenants are not favored under Pennsylvania law, there are numerous case law decisions that void restrictive covenants on what appear to be purely technical grounds. However, getting a restrictive covenant tossed by a court is not a slam dunk. Cases involving restrictive covenants not to compete are fact- intensive. Often the outcome of a case will turn on the interpretation of the specific language in the restrictive covenant.
If a court determines that a restrictive covenant not to compete is enforceable and has been violated, then the court is typically authorized to enter an injunction that can prevent you from working in that new job, or assuming any other employment position that would be in violation of the restrictive covenant. To violate an injunction likely means that you will be found in contempt of court. And, many employment agreements direct that the breaching party is liable for the reasonable attorneys’ fees and court costs of the other party.
What this means for you: If you have questions about your Employment Contract or any agreement not to compete, we can help you. Make Pyfer Reese your choice – call 717.299.7342 to schedule a consultation with Albert J. Meier.
~Albert J. Meier, Esquire