Non-Compete Agreement

In my fourth year working for a company, I was asked to sign a non-compete agreement. Every year, our company gives a Christmas bonus. The agreement was tied to receiving this year's bonus as the compensation for signing the agreement. The agreement is for three years and covers the continents of North America, Asia and Europe. It states I can not work for any competitor in any capacity, on my own or otherwise for three years on these continents. I brought specific technology with me to this company, and I have worked in this industry, with two other companies, for over 17 years. My knowledge is how I make my living. I can easily prove I have been using my technology in this industry for several years before working here. Is this agreement enforceable?

1 answer  |  asked May 15, 2005 12:12 PM [EST]  |  applies to Pennsylvania

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Answers (1)

Christopher Ezold
You may be bound by the noncompete, but probably not to the full extent of the agreement.

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, you may be bound by the noncompete agreement, but probably not to the full extent of the agreement. For a noncompete agreement to be valid in Pennsylvania, you must receive something of value for signing it. Initial employment is something of value to the courts, but continued employment is not. The bonus you received may not be compensation enough; this will depend on whether you would have received it anyway, whether when you signed you could have been denied the bonus anway, etc.

Furthermore, a noncompete in Pennsylvania must be reasonable in time and geographic scope, and must protect a legitimate business interest of the employer. Mere noncompetition is not a legitimate business interest. Your knowledge of the employer's technology, customers or business secrets may be a legitimate business interest. From your question, it appears that the geographic scope is too large; the 3-year length may also be too long. Whether or not a court would enforce these terms depends on the specific facts of your employment, including what your job responsibilities were, how important you were to the company and its customers, and your role in creating, knowing or maintaining the company's confidential information. The fact that you brought the technology that you used with you may indicate that there is little or no legitimate business interest in restrainign you from working for another employer.

Unfortunately, analyses of noncompetition agreements is very fact-specific; from the contents of your question I can do no more than provide general answers.

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.
401 City Line Avenue,
Suite 904
Bala Cynwyd, PA 19004
(610) 660-5585
Cezold@Ezoldlaw.com

posted by Christopher Ezold  |  May 16, 2005 07:49 AM [EST]

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