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Non-Compete Agreements Can Make It Difficult To Pursue New Opportunities
By Samuel Cordes
The business world has changed a great deal in the past decade. Changes in technology and in the marketplace have opened many new doors to companies across the world. Even regional businesses have had to adapt in order to continue operating in such a competitive environment.
Many employees have found that they have skills that are much in demand, and have looked for new places of employment to advance their careers. Often, these jobs will be in fields where they have a great deal of experience, maybe even putting them in direct competition with former employers. What many employees do not realize is that they may be contractually prohibited from going to work for these rival companies.
Before employees are hired, employers may require them to sign non-compete agreements. These agreements basically state that an employee will not go to work for other similar companies in the area and use the skills they acquired from their current position to harm the interests of their employer. They may restrict post-employment opportunities to a certain area and time period. For example, the agreement may state no similar jobs within Pennsylvania for two years after leaving the company.
Non-compete agreements can often become an issue after an employee leaves a company, whether it was by choice or due to termination. Severance agreements often include a non-compete agreement to prevent employees from working for competitors. Pennsylvania courts have implemented a three-part test to determine if non-compete agreements will be considered valid.
First, the agreement must incident to an employee-employer relationship between the parties. Second, the restrictions imposed are reasonably necessary to protect the employer’s interests. Finally, the agreement must also be limited in the amount of time that it will restrict the employee from finding other employment opportunities, and must also be limited in the geographic area that it will cover.
These documents are often the source of frequent litigation between employees and employers. If your employer asks you to sign a non-compete agreement, it is extremely important to know what the agreement will require of you. Some agreements may be overly restrictive, but if signed, will require you to comply with the provisions unless it is struck down by a court.
Employees often have many questions about non-compete agreements. It is important to discuss the concerns that you may have with an experienced business law attorney. Do not rely on your employer’s explanation of the document. You may greatly limit your future employment opportunities if you do not carefully review the restrictions that may be put into place.
By taking the time to review the document, you may be able to negotiate some of the terms with the employer to make the provisions more favorable to you. With the economy struggling to rebound, many people are finding themselves looking for work unexpectedly. You do not want to agree to severe restrictions on possible future employment.