Non-compete agreements can restrict where employees can work after leaving a job, but not all of these agreements are enforceable. Several factors can cause the Pennsylvania courts to consider a non-compete agreement void and unenforceable.
Lack of adequate consideration
One of the primary reasons the court may void a non-compete agreement is if it lacks adequate consideration. Employers must provide something of value in exchange for an employee signing the agreement. This could be a job offer, a promotion, or some other benefit. If the employer introduced the non-compete after employment began without offering a new benefit, the court could rule the agreement invalid.
With the Federal Trade Commission (FTC) trying to stop U.S. companies from enforcing most non-compete agreements, many existing agreements may face broader scrutiny, potentially making them harder to uphold.
Unreasonable impact on the employee’s career
The court can void non-compete agreements that impose an unreasonable burden on an employee’s career. If the agreement significantly limits an employee’s ability to find new employment, the court may see the restrictions as excessive. This can also apply if the non-compete agreement prevents the employee from transitioning to a different career path.
The court’s focus is on ensuring the agreement does not unfairly restrict the employee’s ability to earn a livelihood. At the same time, it considers the need to protect the employer’s legitimate business interests.
Voiding non-competes
While non-compete agreements can impact job options, Pennsylvania employment law aims to reduce overly restrictive or unfair terms. Understanding your rights is important in determining if your non-compete is enforceable.
