Pennsylvania non-compete agreements are not often looked upon favorably by the courts. To uphold a non-compete or restrictive covenant, you must ensure your business maintains strict principles that a court cannot overturn. Besides the general hostility towards non-competes by the Pennsylvania courts, you can also expect increasing federal pushback under the current administration.
If you believe a former employee violates your restrictive covenant, you have the right to sue that employee to prevent them from working or disclosing trade secrets. However, if you do not prove that they violated one of the principles of your non-compete, the courts will not enforce the agreement. See below for two principles of non-compete contracts in Pennsylvania. Always consult with a business attorney before drafting a new agreement.
1. Wrongful termination
The courts consider whether you terminated the employee, or they left of their own accord. Firing an employee does not make your restrictive covenant void. However, the courts consider whether you fired the employee with legitimate cause. If the courts do not see your former employee as a threat to your business, they will not maintain the legitimacy of your agreement. You must present significant evidence that the employee you terminated can damage your company.
2. New ownership
If you purchase a company and establish new management, the previous non-compete may not remain enforceable. You need to examine the former employer’s non-compete agreement for language granting you the right to enforce its terms. It is in your best interest to work with a business attorney while doing so.
Non-compete agreements generally face an uphill battle against the courts. Work with an experienced lawyer to ensure you do not lose trade secrets to a faulty restrictive covenant and stick to the above principles.