Established 1958 ~ Hardball Business Litigation & Complex Negotiations

Pennsylvania Supreme Court Considers Validity of Noncompete Agreements

Are restrictive covenants enforceable regardless of when they are signed? The Pennsylvania Supreme Court has heard argument on this question in Rullex Co. v. Tel-Stream. Existing case law does not clarify whether restrictive covenants are enforceable if they are executed after the parties start working together.

Rullex is a telecommunications construction company and Tel-Stream is a subcontractor that provides labor crews to businesses that service cellular towers. Rullex filed its lawsuit against Tel-Stream alleging that Tel-Stream breached the restrictive covenant by doing work for a competitor of Rullex. The Philadelphia Court of Common Pleas ruled in favor of Tel-Stream and rejected Rullex’s  petition for injunctive relief. Rullex appealed the ruling but the Pennsylvania Superior Court affirmed the trial court, holding that the noncompete agreement was not enforceable because it was executed after Tel-Stream had been hired and was already working on projects. Rullex then appealed to the highest court in Pennsylvania, the Supreme Court of Pennsylvania.

In its latest appeal, Rullex asked the Pennsylvania Supreme Court to change the current law  that requires a non-compete clause to be executed at or before an employee or contractor begins working, and if it was signed later, the courts would not enforce it. Under the new law that Rullex has asked the Supreme Court to adopt, if  a company merely advised the employee or contractor that some time in the future it would require a signed non-compete agreement, and if in the future, long after the employee or contractor had been working on the job it did sign the non-compete agreement, the company would be able to enforce it.

Gary Green of Sidkoff, Pincus & Green P.C., who represents Tel-Stream, fought the request for the Supreme Court to make a new rule and argued to the Court  that based on the evidence and record made in the lower courts before the case reached the Supreme Court, there was no agreement by Tel-Stream when it began to do its work for Rullex that at some future date, Rullex would be able to demand that Tel-Stream be bound by a non-compete clause.  Mr. Green contended therefore  that there was no enforceable agreement for any restrictive covenant.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Provide Skilled Representation in Matters Regarding Restrictive Covenants

If you have questions about the legality of restrictive covenants in your employment contract, contact the Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. today. Call us at 215-574-0600 or fill out our contact form to schedule an initial consultation. We provide skilled representation to clients throughout Pennsylvania and New Jersey from our Philadelphia office.