Unlimited Geographic Restriction in Non-Compete Agreements may be Void

Non-compete agreements incident to an employment relationship are common place in Pennsylvania. Non-compete agreements prevent employees from working for competitors, but the restriction must be reasonable in both the duration and the geographic area. See Socko v. Mid-Atl. Sys. of CPA, Inc., 633 Pa. 555, 569, 126 A.3d 1266, 1274 (2015). Since some businesses stretch nationwide or even worldwide, some non-competes attempt to prevent an employee from working for any competitor anywhere. However, the geographic restriction should be determined by the employee’s duties or sales territory, not the employer’s overall market. See Boldt Machinery & Tools v. Wallace, 366 A.2d 902, 909 (Pa 1976).

Usually when an employer’s geographic restriction is too broad, the court will modify the restriction to better fit the employee’s duties or territory. Sidco Paper v. Aaron, 351 A.2d 250, 254 (Pa. 1976). Despite this, some over broad geographic restrictions may be determined to be void and will not be modified. Adhesives Research v. Newsom, No. 15-0326, 2015 WL 1638557 (M.D.Pa. April 13, 2015).

In Adhesives Research v. Newsom, the former employee’s sales territory included the western half of the United States, but the non-compete included a restriction anywhere employer’s products were sold worldwide. The Court refused to tailor the agreement to create a reasonable geographic location. The Court explained that when an employer utilizes an overly broad geographic restriction, although a specific geographic location could easily be determined based on the employee’s duties, the agreement should be found void with no modification.

For more information, call the Law Office of Sidkoff, Pincus & Green at 215-574-0600 or contact us online. Our non-compete lawyers represent clients in Philadelphia.