Some employers try to have new or prospective employees enter non-competition agreements before hiring. However, they may also have existing employees enter a non-compete clause in new employment contracts. Employers offer these agreements to avoid disputes over employment terms and to protect themselves after a worker leaves or is terminated. Businesses may rely on non-competition clauses to assure that a worker does not disclose confidential information after they leave that employer or use this knowledge while working on their own or for a competitor.
Pennsylvania is one of at least 16 states where employers must provide “consideration,” or something valuable, to existing workers when they seek a binding non-compete agreement. This consideration may not be limited to ongoing employment at that business.
Courts in Pennsylvania require employers to give new and valuable consideration to existing employees. Examples include a promotion or a switch from part-time to full-time employment. Improving or adding bonuses, insurance benefits, severance benefits and other parts of the compensation package may also constitute adequate consideration.
All non-compete agreements in Pennsylvania must have other requirements as well. These agreements should be a secondary part of the employment relationship, have reasonable time and geographic restrictions and protect the employer’s legitimate interests.
Employees should carefully review their negotiating position and the impact that a non-competition agreement can have on their career. The law allows the employee being asked to enter into the agreement the opportunity to have it thoroughly reviewed by an experienced attorney. Taking advantage of this chance can help the employee understand the potential impact and protect important rights during the negotiation process. .
