You have spent hours to train your employees. How do you protect yourself from those employees using that information to compete against you? A non-compete agreement, drafted appropriately, can protect your business from employees using or sharing your confidential and proprietary information with your competitors. While the courts in general have not looked favorably upon non-competes, they are more likely to be enforceable if they include reasonable terms and conditions. At Spadea, Lanard & Lignana, our attorneys advise Pennsylvania employers in avoiding problems that could create liability and legal difficulties later.

For more information regarding non-compete agreements and how we can help protect your company, contact the business law attorneys at Spadea, Lanard & Lignana today.

Non-Competes and Enforceability

A properly-written non-compete agreement can protect your business from an employee who wants to join a competitor or provide proprietary or confidential information to a competitor. This can effectively preserve your client base and protect your business, provided it is enforceable. Pennsylvania law typically enforces non-compete agreements that meet the following criteria:

1. Protects a legitimate business interest
2. Does not deprive an employee of a right to make a living
3. Does not impose an unreasonable geographical limitation on an employee
4. Does not remain in effect for an unreasonable amount of time

Which Employees Sould Be Asked And When Is The Right Time To Ask Them To Sign A Non-Compete?

Should all employees be asked to sign a non-compete agreement? Employees who do not have an essential function in the company typically should not be asked to sign non-competes since it is difficult to establish a legitimate business purpose in doing so and may prevent the individual from being able to make a living and therefore unenforceable by the employer.

As with many aspects of the law and business, timing is critical in this area of the law.  Employers may ask an employee to sign a non-compete after he or she has already been working at a company for months or even years. A non-compete, like any contract, is not enforceable without offering any new compensation or benefit to the employee for signing it. Typically the best time to have an employee sign a non-compete agreement is prior to or on their first day of work for the company.  

It is important to remember enforceability will depend in part on whether or not a restrictive covenant serves an essential or important business interest for the employer and whether some sort of compensation (financial or other) has been given.

As an example, asking a Chief Financial Officer (CFO) to sign a non-compete is different than asking a secretary to sign a non-compete. The former CFO can leave the job and find non-competing employment and is privy to important internal information creating an essential business purpose for the non-compete agreement.  In most cases, there is not an essential business purpose for the company to have a secreatary sign a non-compete.  If an employee is asked to sign a non-compete after they have started work at a company, some sort of compensation or benefit ("consideration" in legal terminology) should be offered.

Consideration Should Be Offered

Since non-competes may impact an employee's ability to leave for a more lucrative position, an employer should provide a pay raise, additional stock options, more vacation, or other material or substantial incentive to offset the restrictions of a non-compete agreement. In cases where an employee is presented with a non-compete prior to his or her first day of work, the job itself is usually considered adequate "consideration" by the courts.

Questions? Contact Lanard Law Today

Approachable and accessible, our lawyers have helped numerous companies navigate the murky waters of non-compete agreements. We understand non-compete laws in Pennsylvania and have the resources needed to help you avoid costly litigation and future legal difficulties. To discuss your situation, contact the non-compete agreement attorneys at Spadea, Lanard & Lignana today.