Non-Compete Question

I moved to PA a little over two years ago and was hired by a company that is in distribution. One of the conditions of hire was to sign a non-compete agreement. I had lived in another state for the previous eight years and had worked in a like company there. I signed the non-compete agreement which stated that you could not work for or own any business in which you would: sell, buy, or promote the same product as being sold in the current position. (If I would not have signed the non-compete I would not have been hired - that is the consideration given.) In that two years I was in a sales position and had developed one very good relationship with a customer that had been doing business with the company for several years b-4 my coming there to work and they continue to do the same amount now and will do so in the future. I left the distribution company to go to work for a manufacturers rep in a position that required no selling, promoting, or buying - the position is only for the management of the material bought by the distributors thru my company in which they sold to my ex-customers. I am not privy to any pricing or bills of material until after the job has been bought by the distributor and my only job description is to provide the distributor with any information pertaining to their orders once they have been placed. I in no way am in a position to compete against my former employer on any level as I am not in any kind of sales position. They are wanting to pursue the non-compete as if I am in competition with them. The non-compete is for 3 years and 100 miles from any of the locations of the company (which they have a total of 4). There are at least a dozen others who had left the my former employer and went to work for other like (manufacturers reps)companies that I am aware of and none of them were pursued on their non-compete's. The companies arguement is that it is a business of relationships and they are tired of training their people to leave and go to work for manufacturers reps. They did not train me as I had worked in this field in the other state for eight years b-4 coming here. My question is this - how long does a former employer have to file a suit against me and if I am not competing against them do they have much leverage in winning a case like this? Thank you for your time.

1 answer  |  asked Feb 8, 2005 3:31 PM [EST]  |  applies to Pennsylvania

Unlock Non-Compete Agreements: Keys to Escape

Answers (1)

Christopher Ezold
You likely have a valid defense against the non-competition 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 likely have a valid defense against the non-competition agreement. In Pennsylvania, non-competition agreements must be reasonable in time, geographic or substantial scope, and must be reasonably related to a legitimate business interest of the employer. To give you a reliable opinion, I would need to review the agreement and a more detailed understanding of your job and your industry. However, based solely on the facts in your question, it would appear that, under the current case law, your former employer does not have a 'legitimate business interest' in preventing you from working as a manufacturer's representative. Recouping an investment in 'training' employees is not a legitimate business interest; if it were, employees would become akin to indentured servants.

Furthermore, you appear to be outside of the terms of the noncompete, as you do not promote, buy or sell.

Finally, a non-competition agreement is a contract; in Pennsylvania, a party claiming that a written contract was breached must sue within four years. I am not aware, however, of any non-competition agreements being enforced after the employer has let the issue languish for four years. In all practicality, if they do not sue you within the first 6-9 months after they have discovered your new employment, I do not expect that they will sue at all. Waiting for four years may also provide you with other defenses, as well (i.e., how important a business interest do they have in preventing your employment if they don't act immediately?).

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

posted by Christopher Ezold  |  Feb 9, 2005 08:19 AM [EST]

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