How Enforceable are Do-not-Compete Agreements in Pennsylvania?
Do-not-compete agreements (NCAs) are often a source of consternation for those looking to make a career move. In the current economy, even if you aren’t looking to change jobs, being asked to sign a non-compete may cause you to be curious how it could impact your future professional pursuits. Therefore, it is not surprising that many people who work in Pennsylvania wonder how enforceable do-not-compete agreements are in practice.
There is a fair amount of misinformation regarding the enforceability of do-not-compete-agreements that is available. If that wasn’t enough, laws governing NCAs recently changed in Pennsylvania. Previously, courts often relied on a decision called Insulation Corporation of America v. Brobston to rule that when an employee was fired without cause, any do-not-compete agreement present was unenforceable. However, this analysis has been successfully challenged and there are many more issues that now come into play when there is a determination made on the validity of a do-not-compete agreement.
What is considered when determining the validity of a do-not-compete agreement?
Missett v. Hub International Pennsylvania established that the circumstances of the termination alone are not enough to determine whether the NCA is valid. Therefore, by itself, it does not matter whether an employee was terminated with or without cause or if you left of their own accord. Rather, the circumstances surrounding a termination are merely one factor to be considered in a multi-factor analysis. Other factors to be considered include whether the restrictions are reasonable in geography and time. Determining who qualifies as a competitor is another important line of analysis. Additionally, a court will require that such a restriction is necessary to protect the legitimate business interests of the employer. Finally, a court will look to both “equitable facts and circumstance” and public policy reasons in determining the enforceability of a do-not-compete. Both equitable and public policy reasons are especially notable as they have the potential to render unenforceable even an otherwise reasonable do-not-compete agreement.
Since Missett v. Hub, analyzing the impacts and the enforceability of a NCA in Pennsylvania can be complex and nuance-filled. An experienced corporate attorney can explain to you the likelihood that your NCA is enforceable. If the agreement is enforceable, he or she can discuss with you the extent of its enforceability and the options that you have. Don’t make a rash decision based on old caselaw or an incomplete understanding. Contact an expert attorney today regarding your do-not-compete agreement so that you can make informed decisions in the future.