How enforceable is this non-compete in PA?

I have been offered a position with a company in PA. They have sent me an offer letter as well as a non-compete they would like me to sign. The non-compete seems to have overly restrictive covenants as it relates to the duration of the non-compete period (12 to 18 months) and the geographic constraints (North America, EU, and China and any country this company conducts business in at the future point in time). In essence, they are asking for 1.5 years of non-compete while paying only 3 months of salary and benefits should I leave voluntarily from the firm. If I should be laid off, I am still subject to a 1yr non-compete with only half year's pay and benefits! The business is a very specialized field and finding something outside of this field will be very difficult. I was just wondering if the PA courts will uphold and enforce what I believe is unreasonable restrictions in the non-compete (can go without pay or benefits for 1.25 years!) and should I take the job and sign it with the hopes that it won't be enforceable should I decide to leave the firm in the future? Thanks for your assistance.

2 answers  |  asked Jul 24, 2009 8:24 PM [EST]  |  applies to Pennsylvania

Unlock Non-Compete Agreements: Keys to Escape

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, Attorney Goldner is correct that 'reasonableness' is a fungible standard that varies from case to case. As a general rule, however, you cannot be restricted from working in geographic areas in which your employer does not currently do business (if you are engaged in preparing your employer's entry into that new area, the result might be different). Furthermore, PA courts will 'blue line,' or edit, noncompete agreements that are overly broad. Some courts have held that certain agreements are SO overly broad that they cannot be edited, and are entirely invalid. That may be the case in this situation.

The fact that you will be paid 3 to 6 months of compensation for the noncompete is in your employer's favor. Such amounts are likely to be found sufficient compensation, even they don't extend to the full time you are restricted.

It does not sound as if this agreement is one you should sign. However, these situations are always very fact-specific, and would need a thorough review by an attorney to determine the best course of action for you.

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

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

posted by Christopher Ezold  |  Aug 7, 2009 07:35 AM [EST]
Harold Goldner
Non-compete covenants are generally enforceable in Pennsylvania but must be reasonable as to scope, meaning geographic location and time, and they must be reasonably related to the issues the employer is seeking to protect.

Different industries have far ranging differences in what time periods are appropriate. For instance, web design changes so rapidly, that a non-compete any longer than a year would probably be deemed excessive. On the other hand, barber shops often have periods of up to 5 years.

It's impossible to determine from your inquiry what kind of work you're doing, but a global non-compete for 18 months is a little hard to fathom. I suggest you review the entire situation, and contract, with a Pennsylvania employment lawyer.

posted by Harold Goldner  |  Jul 27, 2009 08:26 AM [EST]

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