Some companies have long depended upon non-compete agreements for exiting employees, former owners or partners. In recent years, critics have questioned the validity of these agreements, claiming that they are generally overly restrictive and limit the signee’s ability to earn a living or pursue a successful career in a particular field. While California and some other states have made them invalid, Pennsylvania still allows them if they meet specific criteria.
3 criteria for a valid non-compete
While the state’s Attorney General voiced support for doing away with mandatory non-competes, they are still enforceable, mainly if they focus on the following:
- Protect against the departing employee taking customers’ accounts with them.
- Protect against using or exploiting trade secrets involving pricing, services or products.
- The person voluntarily signed it.
Valid non-competes are generally limited to a few years in length and geographic scope. The specifics will vary depending on the nature of the business and the person’s position at the company. Anything seen as punitive or restricting a person’s ability to earn a livelihood will likely be invalid unless substantial compensation exists.
Those who feel that their non-compete unduly restricts their career should review the document and share it with a legal professional with experience drafting and litigating non-competes. Legal professionals can offer insight into whether the agreement will likely hold up in court.