Restrictive Covenants and Non-Competes
In an increasingly competitive global business environment, many companies require employees to sign restrictive covenants and non-compete agreements. Depending on one’s perspective, however, the effects of these agreements may be positive or negative. Non-compete agreements and restrictive covenants serve to protect a company’s business interests, but they may also limit an employee’s ability to earn a living.
If you represent a business which has been damaged by the violation of a non-compete agreement, or if you are an employee who has been financially victimized by an unreasonable agreement, the business litigation attorneys at Maselli Warren, P.C. can help you resolve the conflict and move forward with your professional life.
When Non-Compete Agreements Lead to Litigation
At Maselli Warren, P.C., our business attorneys have over 25 years of experience representing companies and individuals in Pennsylvania and New Jersey in matters involving restrictive covenants and non-compete agreements. We assist businesses and employees in matters of negotiation, preparation, interpretation, and enforcement of these important contracts. Additionally, we represent businesses and employees in litigation resulting from disputes arising from non-compete agreements and restrictive covenants.
Oftentimes, litigated matters are initiated by way of an “order to show cause,” by which an employee’s former employer asks a court to impose immediate restraints upon the employee in order to prevent the former employee from interfering with the legitimate business interests of the employer. In many cases, the new employer is a party to the lawsuit, and/or chooses to defend the newly acquired employee against their former employer.
How are Restrictive Covenants and Non-Compete Agreements Used?
One of the basic ways in which restrictive covenants and non-compete agreements are utilized is to prevent employees from disseminating information which must remain confidential in order to retain commercial value. For example, it is common for employers to request that employees with access to confidential information sign a non-compete agreement in order to prevent them from sharing invaluable trade secrets with competitors. A trade secret can be almost anything — a recipe, a formula, an equation, a list of sales leads, a program, a technique — that has financial value to its company, and which will result in financial damages to that company if exposed. Non-compete agreements prohibit employees from divulging trade secrets.
Employees, however, are not the only individuals who may be subject to restrictive covenants and non-compete agreements. Additionally, these agreements are commonly utilized among the buyers and sellers of businesses. For example, a business buyer may wish the seller they are purchasing the enterprise from to sign a non-compete agreement. Adhering to this agreement will prevent the seller from re-opening in the same geographic area, the same industry, and/or operating within a certain time frame, and consequently competing with the new business.
Problems with Non-Compete Agreements
When a non-compete agreement or restrictive covenant is violated, the aggrieved company can suffer from extensive financial damages. On the other side of the issue, an employee may allege that the terms of a non-compete agreement are unreasonable, and have consequently hindered their ability to earn an income. In either case, non-compete agreements and restrictive covenants can wreak financial havoc if their terms are violated, or if their terms make unreasonable demands.
While the damages incurred as a result of a non-compete agreement may feel very obvious to the employee or business that has been adversely affected, proving a case in court can be extremely difficult without the assistance of a skilled and experienced employment law attorney. In order to be considered enforceable, a non-compete agreement must be not prohibit too broad of a physical area, too long of a time period, or too many types of businesses. If a non-compete agreement’s terms are not reasonable by these standards, the agreement may not be able to be enforced. This means that an employee may not be prohibited from sharing trade secrets. If an employee has been financially trapped by an overbearing non-compete, it must be proven that the terms of the agreement are, in fact, unreasonable.
Maselli Warren, P.C. has spent years representing former employers, former employees, and new employers in litigated matters arising from restrictive covenants and non-compete agreements. Prompt strategic action is essential to a successful outcome, so it is optimal to begin your evaluation sooner rather than later. To arrange for a confidential consultation with one of our highly experienced business attorneys, call the law offices of Maselli Warren, P.C. at (800) 891-2657, or contact us online.