After 33 years of employment and shareholdership, I am being asked to sign an employment agreement

I am employed by an old company (1933) that has been through several different types of ownership including a management buyout 25 years ago, and the creation of an ESOP 6 years ago. We have a new president and general manager who is younger than me and which I have known professionally for several years before he came on board. The upper level management of our company is asked me to sign a non-compete agreement now. No consideration or compensation is being offered. What is your take on this?

2 answers  |  asked Jan 2, 2012 10:09 AM [EST]  |  applies to Pennsylvania

Answers (2)

Christopher Ezold
Before I respond to your inquiry, I must state that we have not spoken, I have not reviewed the relevant documents and facts, and I do not represent you. Therefore, my discussion below is not a legal opinion, but is informational only. Finally, my discussion applies only to issues to which Pennsylvania or Federal law apply, unless otherwise specified.

That being said, noncompetition agreements are contracts which must be supported by consideration - that is, a benefit that both sides are receiving. In general, noncompetition agreements in Pennsylvania cannot be supported by 'continued employment' as consideration. If you are getting nothing new for the noncompetition agreement you are being offered, it is almost certainly not enforeable against you.

If you would like to discuss this matter further, please feel free to contact me at the below address(es) or telehpone number.

/Christopher E. Ezold/
The Ezold Law Firm, P.C.
One Belmont Avenue,
Suite 501
Bala Cynwyd, PA 19004
(610) 660-5585
Cezold@Ezoldlaw.com
www.ezoldlaw.com

posted by Christopher Ezold  |  Jan 3, 2012 1:45 PM [EST]
Scott Leah
A non-competition agreement, like any contract, must be supported by adequate consideration. That means that both sides must have a benefit and a detriment.

The detriment to you is clear - you are going to be restricted in future employment under the non-competition agreement.

The question is what benefit you are receiving. Typically, a company requires that a non-competition agreement be signed at the time the employment relationship commences. Therefore, the benefit to the employee is getting the job.

But where an existing employee is asked to sign one, there must be something else, as the employee already has the job (keeping the job is not considered to be adequate consideration). The benefit to the employee could be a raise, a promotion, a salary increase, a bonus, etc.

If they fail to give you some benefit to signing the agreement, there is a very good chance that they will not be able to enforce it later.

The agreement itself should attempt to set forth the consideration. I would be happy to take a look at the proposed agreement for you and give you my thoughts on whether it will be enforceable in the future.

You can contact me at 412-594-5551.

Scott

posted by Scott Leah  |  Jan 2, 2012 10:43 AM [EST]

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