Non-Compete, Non-Solicitation & Restrictive Covenants

Non-compete agreements are enforceable in Pennsylvania, but courts apply them with skepticism. A non-compete that is too broad will be reformed — or thrown out entirely. Understanding the rules gives you leverage whether you're the employer drafting the agreement or the employee being asked to sign one.

Pennsylvania Non-Compete Standards

To be enforceable, a non-compete must satisfy three requirements:

• Reasonable in duration: Courts rarely enforce non-competes longer than 2 years. One year is the sweet spot — anything over 2 years faces heavy scrutiny.
• Reasonable in geographic scope: Must be limited to the area where the employer actually does business. A nationwide non-compete for a company that only operates in eastern PA will likely be narrowed.
• Reasonable in scope of restricted activity: Must be limited to work that actually competes with the former employer. You can't prevent someone from working in their entire profession — only from doing the same type of work for a direct competitor.

Consideration Requirement

This is where many non-competes fail. If the non-compete is signed at the time of initial hiring, the job itself is adequate consideration. But if you're asked to sign a non-compete after you've already been employed, Pennsylvania requires new, independent consideration — continued employment alone is not sufficient. A raise, a promotion, a bonus, access to new training — something of tangible value must be exchanged. Without it, the non-compete is unenforceable.

Non-Solicitation Agreements

Non-solicitation clauses — which prevent you from soliciting former clients or recruiting former co-workers — are analyzed under the same reasonableness framework but are generally easier to enforce because they're less restrictive than a full non-compete. Many employers should consider non-solicitation agreements as an alternative to non-competes: they protect the business's key relationships without preventing an employee from earning a living.

Trade Secrets & Confidential Information

Pennsylvania adopted the Uniform Trade Secrets Act (12 Pa.C.S. § 5301 et seq.). Trade secret misappropriation claims can be brought even without a non-compete agreement. Customer lists, pricing data, proprietary processes, and formulas can qualify as trade secrets if the employer takes reasonable steps to keep them confidential.

Practical Advice

For employers: Keep your non-competes narrow and specific. A tightly drawn 1-year, geographically limited non-compete with adequate consideration is far more enforceable than an aggressive 3-year nationwide restriction. Courts have the power to "blue pencil" (narrow) an overbroad restriction, but they may also refuse to enforce it entirely.

For employees: Don't assume a non-compete is enforceable just because you signed it. If you're considering a job change and have a non-compete, get a legal opinion before resigning. The analysis is fact-specific, and many non-competes have fatal defects — particularly the consideration issue for existing employees.