Non-Competition

PA Superior Court closes non-competition-agreement loophole

May 15, 2014 | by Eric B. Meyer

In Pennsylvania, a company and an employee can enter into an agreement whereby, in exchange for some form of consideration, the employee agrees not to compete with the company after the employment ends.

Consideration can come in a variety of forms; for example, a raise, bonus, promotion, or ~~sugar~~. Initial employment can also be sufficient consideration.

However, in Pennsylvania, continued employment won’t cut it. That is, a non-competition agreement will be invalid if an employee signs it after commencing employment — even if you tell the employee that he/she will lose his job by not signing.

No non-compete in the offer letter, but here’s a way to enforce one…

July 1, 2013 | by Eric B. Meyer

You’re hiring for an engineer position. To assist, you engage a search firm, which finally locates an ideal candidate. After a telephone conversation, and a subsequent tour and in-depth interview, you know that you have the right person for the job. So, you prepare and send an offer letter.

The offer letter includes a summary of the position, responsibilities, location, base salary, benefits, effective date, and confidentiality. The letter also states: “You will also be asked to sign our employment/confidentiality agreement. We will not be able to employ you if you fail to do so. In addition, the first day of employment you will be required to sign an Employment Agreement with definitive terms and conditions outlining the offer terms and conditions contained herein.”

The offer letter does not contain any mention of a non-competition agreement.

Employer customer lists: “Whatever you say, dude.”

June 25, 2012 | by Eric B. Meyer

You’re looking to hire a new salesperson. Scott Salesperson comes in to interview. He currently works for your top competitor.

“Scott, do you have a non-competition agreement?”

“No.”

“Scott, do you have a confidentiality agreement?”

“No. In fact, I have a list of my own customers that I could sell to if you hire me.”

Sounds good, right. But, before hiring Scott, do you have any obligation to independently verify the facts that Scott has represented?

New Jersey employers will definitely want to click through because, last week, the New Jersey Supreme Court answered…

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Is a non-compete agreement signed months after work begins enforceable?

June 1, 2011 | by Eric B. Meyer

I was reading a blog post from Jennifer L. Gokenbach at the Colorado Employer’s Law Blog, discussing how, as of yesterday, Colorado deems continuation of at-will employment to be sufficient consideration to support a non-competition agreement. In non-lawyer speak, that means that if an employee signs an agreement not-to-compete in Colorado after the employee starts working, on the condition that if the employee does not sign the agreement then the employee will be fired, the employer may later enforce that agreement.

That’s now the law in Colorado. Is that also the law in PA, NJ, and DE?

Delaware: Yes. Research & Trading Corp. v. Powell, 468 A.2d 1301, 1305 (Del.Ch.1983).

New Jersey: Yes. Hogan v. Bergen Brunswiq Corporation, 153 N.J.Super. 37, 378 A.2d 1164 (App.Div. 1977).

Pennsylvania: No. An agreement not to compete with a former employer must be supported by new consideration; i.e., a change in the conditions of employment (e.g., a raise, promotion, or other financial benefit). Maintenance Specialties, Inc. v. Gottus, 455 Pa. 327, 314 A.2d 279, 280 (Pa. 1974).

Misclassifying an employee may void a non-compete agreement

April 19, 2011 | by Eric B. Meyer

In an unpublished opinion, the Third Circuit Court of Appeals denied a Pennsylvania company’s attempt to enjoin a former employee, who had entered into several restrictive covenants with the company, to compete directly against the company and solicit its customers.

What did this employer do wrong and how can you learn from its mistakes?

After the jump…

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4 ways employers can protect themselves when employees leave

January 19, 2011 | by Eric B. Meyer

This story that I wrote with my Dilworth Paxson LLP colleague, David Laigaie, the Chair of Dilworth’s Corporate Investigation/White Collar Group, recently appeared in The Legal Intelligencer. If you operate a business in Pennsylvania and you have trade secrets, employees with non-solicitation agreements, or non-competition agreements, then take a few minutes and read this article. You’ll be glad you did.