Is your noncompete agreement enforceable?

On Behalf of | Nov 30, 2020 | Business Law

If you have launched a startup venture, you undoubtedly know how difficult it can be to recruit and retain top talent. Especially if you have trained them, you do not want your skilled workers to compete against your company either by starting a business or joining a rival firm. 

Noncompete agreements, sometimes called covenants not to compete, are popular in some industries in the Keystone State. Still, if you cannot legally enforce it, your noncompete agreement may not do you much good. When deciding whether a noncompete agreement is enforceable, judges in Pennsylvania generally prefer a limited scope. 

Your business interests

In the free market, employees generally have flexibility to work for any company they choose. Likewise, with Pennsylvania’s at-will approach to employment, you probably can terminate employment for any legal reason or no reason at all. 

Your noncompete agreement changes matters somewhat. Provided your agreement is reasonably necessary to protect a legitimate business interest, a court is likely to enforce it. 

Still, your agreement may not be too restrictive in its geographical coverage or duration. 

Geographical coverage

Whether a noncompete agreement may cover too large of a geographic area usually requires a facts-and-circumstances analysis. 

While some firms may have a legitimate business interest in having statewide or even nationwide noncompete arrangements, others may only have an interest in preventing competition in only a town or city. 

Duration

The length of your noncompete agreement may also render it unenforceable. If the agreement requires a former employee no to compete for the rest of his or her life, for example, a court may find it to be too restrictive. 

Put simply, to enforce your noncompete agreement, you must be certain its duration is reasonable.