Are Non-Compete Agreements Enforceable in PA?

Society benefits when people work. As such, agreements that limit a former employee’s right to work aren’t favored in Pennsylvania. They can be enforceable, however, if they’re narrowly drafted by an experienced PA employment lawyer from Mette Attorneys at Law. Call (717) 232-5000 or connect with our Lebanon employment contract attorneys online to schedule a consultation.

Overview of Contracts Restricting Employment

Pennsylvania is an at-will employment state. Employers are free to terminate their employees for any legal reason, just as employees are free to quit their jobs without penalty. This principle can make employers hesitant to invest in training new employees. What if, after training an employee, she immediately takes a higher-paying job with a competitor? For this reason, Pennsylvania recognizes and enforces non-compete agreements.

Non-compete agreements are contracts restricting employment either while the employee is working for you, such as taking a similar night job with a competitor, or after the employment relationship ends. These agreements do not prevent employees from quitting, but they can limit their ability to compete with your company.

Ensuring the Enforceability of Lebanon Non-Compete Agreements

You need an experienced contract attorney’s assistance to ensure non-compete agreements are enforceable in Pennsylvania. Generally, courts will only enforce the terms of a contract restricting employment if it complies with the following:

• Protects a Legitimate Business Interest: You cannot restrict an employee’s right to work except to protect a legitimate business interest, such as client relationships or trade secrets. For example, you might restrict a chef from using your recipes at a competitor’s restaurant, but you cannot restrict his ability to drive for Uber after his shift.
• Limited Scope: The non-compete must only extend to a reasonable geographic area, such as Lebanon County, for a limited amount of time.
• Consideration: Failure to offer an employee consideration, such as a bonus or continued employment, will void the contract.
• No Undue Hardship: Even if the non-compete is otherwise enforceable, it cannot unduly restrict a former employee’s right to earn a living in his or her profession.

When drafting a non-compete in Lebanon, your best option for ensuring enforceability is to work with a local business lawyer to strictly limit the scope of the agreement to protect only direct financial and business interests.

Factors Voiding Non-Compete Agreements in Pennsylvania

Failure to limit the scope and duration of the non-compete agreement may result in an unenforceable contract. If the agreement is overly burdensome and broad, the court may void the contract entirely and allow the employee to directly compete with your business. In some cases, Pennsylvania judges have the discretion to engage in ‘blue-penciling.’ This means they might edit the contract and enforce only reasonable terms.

Healthcare Professionals

Always speak with a PA lawyer about non-competes involving healthcare professionals. Recent changes to Pennsylvania law prohibit or strictly limit non-competes in the medical profession due to increasing healthcare needs.

Independent Contractors

Importantly, non-compete agreements are generally not enforceable against independent contractors (1099s). If you want to reap the financial and legal benefits of working with 1099s, you cannot unduly restrict or control their employment activities. This is why rideshare drivers can operate for both Uber and Lyft even though the companies are in direct competition in Lebanon.

Connect with a Lebanon, PA, Non-Compete Agreement Attorney

Our dedicated business contract professionals understand how to draft enforceable non-compete agreements in accordance with strict Pennsylvania laws. Call (717) 232-5000 or contact our Lebanon business lawyers online to schedule a consultation.