Category: Business Law

When Should a Business Owner File for Bankruptcy?

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business owner bankruptcy

Small and large businesses are dealing with the fallout from the coronavirus pandemic. Supply chain issues and high inflation are making it harder to make profits. Many places of business are having a hard time finding good workers to help provide customers and clients with the goods and services that they need. Those are just a few of the many reasons why bankruptcy filings are on the rise.

A bankruptcy filing is a viable solution for reorganizing existing debt in a way that enables a business to continue. However, filing for bankruptcy does raise many legal issues that could lead to business litigation if the owner is not careful. The following are some commonly encountered legal issues that could arise when a business owner files for bankruptcy. 

Worker Adjustment and Retraining Notification Act

The federal Worker Adjustment and Retraining Notification Act (WARN or the Act) affects businesses with more than 100 employees. The Act requires businesses to notify workers in advance of any planned business closings or mass layoffs that are likely to occur due to the bankruptcy filing. 

Advance notice must be made 60 days before implementing any planned closing or layoffs. The notice will help workers to avoid surprises and make any necessary changes to protect their personal finances. It also helps them to find new jobs and avoid filing for unemployment. If you plan to continue doing business after reorganizing debts, the Act could help you to retain valuable employees. 

Creditor Legal Issues

If you are considering a business bankruptcy filing, your business has debts that you currently cannot afford. The creditors for your business could reclaim any equipment, materials, or other assets that it might have provided. It generally helps to work with your creditors to determine a viable way to restructure the debts. That could help the creditors maintain their support of your business.

A creditor could file a proof of claim with the trustee assigned to your business bankruptcy case. The proof of claim helps to ensure creditors will obtain at least some compensation if any is available due to the bankruptcy. Creditors could include vendors, energy providers, and others who routinely provide goods or services that enable your business to function. 

Debtor Legal Issues

Many places of business have debtors who owe them goods or services. Filing for bankruptcy does not automatically wipe out the debts owed to your business. Collecting those debts could be an issue and require legal assistance. Some debtors might refuse to pay and count on the pending bankruptcy to wipe out the debt. However, a business owner can overcome this with a court order.

Commercial Lease Assignments

Your place of business might have a commercial lease for the location that houses your business operations. A bankruptcy filing might enable you to assign your commercial lease to another business entity.

Many commercial leases have anti-assignment clauses that prevent renters from subletting or assigning the lease to other parties. A bankruptcy filing might change that. However, landlords might try to enforce anti-assignment agreements even while a bankruptcy filing is proceeding.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help You Work Out Business Bankruptcy Issues

If your business is near bankruptcy, you can contact our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. for legal help. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.

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What Are Common Business Contract Disputes?

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Contract Disputes

According to the International Association for Contract and Commercial Management, nine percent of contracts experience a claim or dispute. Contract disputes can happen due to unexpected business circumstances or the unwillingness of a contracted party to deliver the products or services they agreed upon.

The following are some of the most common types of business contract disputes:

  • Breach of contract.
  • Business-to-business disputes.
  • Partnership disputes.
  • Non-compete agreements.
  • General liability.
  • Sales contract.
  • Service contract.
  • Employment contract.
  • Commercial lease.
  • Business partnership agreements.
  • Joint venture agreements.

Knowing common contract disputes will make your business better prepared for potential litigation.

What Are the Components of a Business Contract?

The main parts of a business contract include: an offer, mutual consideration, transaction details, and acceptance. Language in the contract should be clear and concise. Without the critical components, you will likely experience legal issues. Safeguard your contract by detailing the essential parts, along with standard clauses found in business contracts.

What Are Clauses in Business Contracts?

Business contracts will have different transactions, payment terms, and other components. You can organize these components by dividing your business contracts into main clauses. Common clauses in business contracts include:

  • Arbitration clause.
  • Choice of law clause.
  • Confidentiality clause.
  • Definitions clause.
  • Indemnification clause.
  • Severability clause.
  • Warranty clause.

Why Should You Consider Legal Guidance for Your Business Contracts?

Business disputes can happen with any contact. A strong business contract that is well-worded is paramount. Begin with a clear purpose in mind when drafting your business contracts.

If you have a business, a skilled lawyer can review your contracts. A reputable lawyer can prepare, negotiate, and review contracts pertaining to the following:

  • Business purchase agreements.
  • Commercial leases
  • Employment contracts and non-competes.
  • Sales contracts.
  • Shareholder and partner agreements.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Will Ensure That You Have Solid Business Contracts

Business contracts have many complex components, and a skilled lawyer can ensure that your contracts are binding and strong. If you need guidance with drafting and finalizing your business contracts, contact our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. today. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.

 

How Does Intellectual Property Work?

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Intellectual Property

Intellectual property (IP) encompasses patents, trademark, copyrights, and trade secrets. In general terms, IP refers to any intangible product made by a person, and it is important to protect your IP.

Fortunately, safeguards can be put in place to protect inventions, company branding, trade secrets, and other forms of IP. Innovators should work with a lawyer when they are seeking guidance for issues related to IP, including trademarks, copyrights, patents, and trade secrets. Listed below are ways you can protect your IP.

Trademarks

Trademarks usually safeguard brands and the logos used on products and services. You should follow these steps in order to receive a trademark:

  • File a submission, and choose what types of products and services you want to use for the trademark.
  • A trademark examiner examines the submission to see if anyone has already registered the same or similar mark. If nothing is found, a trademark is published in a public register to other parties to object. If no objection is provided, then the trademark is approved.
  • A trademark stays in effect for successive 10-year periods if the owner meets the legal necessities for renewals.

Copyrights

When an author writes, draws, or designs a piece of work, they have immediate copyright. A person can file an application to receive a federal registration for a copyright via mail, online, or in person, which endures for the creator’s lifetime, along with an additional 70 years.

Patents

Patents shield innovative ideas, processes, and inventions. Once the innovator files a patent application with the U.S. Patent and Trademark Office (USPTO), an examiner reviews it to make sure that the invention has not been previously utilized.

Usually, the examiner and innovator seeking the patent will have a discussion on the merits of granting the patent. It is worth nothing if the person receives a patent, it is valid for 20 years from the application’s filing or 17 years from the patent’s issuance, whichever is longer.

Trade Secrets

A trade secret is private, specific information that affords its owner a financial edge over competitors. To protect a trade secret, the owner must do the following:

  • Regulate physical and electronic access.
  • Utilize nondisclosure agreements with any party that requires you to share the information, such as a regulatory agency.
  • Stamp documents with a trade secret stamp or watermark.

Innovators should seek legal counsel to clear any hurdles in the patent process to avoid issues and possible business litigation.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Are Skilled at Protecting IP

Protecting your IP rights can be contentious, with several hurdles to clear. Our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. can help you avoid issues related to your IP. Call us at 215-574-0600 or complete our online form for an initial consultation. We are located in Philadelphia, and we serve clients throughout Pennsylvania and New Jersey.

Who Is the Owner of a Family Business?

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family business

There are thousands of large and small family-owned businesses in and around the Philadelphia region. Often, the issue of who actually owns the business comes up, especially when trying to get a business loan or selling the business. This is important to resolve as soon as possible in order to avoid business litigation that may arise. With some family-owned businesses, the entity has been in operation for so long that everyone loses track of whose name is on the ownership papers. This can happen when many members of the family work for the company.

There are five basic family business ownership models. When every family member who works at the business understands these five models, usually they all can decide on what type of business structure should be used.

Owner-Operator

This is the simplest form of family business ownership. The owner-operator business ownership model is when one person or possibly a married couple own the business and will be responsible for all the decisions.

In order for this model to succeed over generations, there has to be a decision by the owner and other family members of who the successor will be in the future. Once the owner-operator retires or passes away, the successor can take over the company smoothly.

Partnership

In a family partnership, different family members are leaders of the company, and they are usually equal owners in the company. A problem with this type of ownership could arise when future generations want to become partners as well. For example, three sisters are partners in a family owned diner, but as they age, their children want to become partners as well. Under this scenario, there has to be delicate negotiations and honest conversations.

Distributed Model

In a distributed model, the ownership is passed down to most or all descendants, whether or not they work in the company. This allows for the continuation of the business and the compensation of all family members. The owners would have to negotiate a fair compensation package that would adequately compensate the family members who work in the business.

Nested Model

In a nested model, different extended family members own different parts of the business. For example, smaller family ownership groups sit inside larger ones, similar to a nest. This system of family ownership works when there is an overall business owned by many members of the family, but other members want to branch out into new or other areas of business.

Public Model

Under the public model, the business is treated like a publicly traded company, even though it is still owned by the family. Whether shares are publicly traded or not, the business is run by professional managers, and the owners play a minimal role, usually limited to electing board members.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Have Been Helping Family Business Owners for Decades

If you have questions about your family business and its ownership status, our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. can help. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we serve clients throughout Penns

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Legal Issues to Consider When Selling a Business

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Philadelphia Business Lawyers Helping those looking to sell their business

There are many issues that need to be discussed and agreed upon when selling a business, but a lawyer can help. If you are thinking about selling your business, you should speak to a lawyer who can put together all the needed documents and perform other tasks. The following includes some common legal issues you may encounter when selling your business.

Business Type

How the business is structured or organized will dictate how complicated the sale will be and what issues have to be addressed. If it is merely a sole proprietorship owned and operated by one person, then these transactions are fairly simple. However, the business could be structured as a partnership or a limited liability company.

If it is a partnership or limited liability company with several owners, everyone who is a part owner of the company has to agree to the sale and all terms. Corporate level meetings would have to take place, and a resolution of sale would need to happen, which is where everyone’s vote is recorded.

Tax Issues

Every sale of a business should be reviewed by an certified public accountant or business tax specialist so the parties understand the tax consequences of the sellers and the buyers. You should not rely solely on the lawyers handling the drafting of the sales documents. With many complicated business purchases, you may want to have a written certification from an accountant detailing the tax consequences as part of the entire purchase terms.

Due Diligence

Due diligence is a legal term that describes the process of researching and investigating every important aspect of a business before and during the purchase process. Usually, the buyer will request information, documents, data, and other things in order to confirm aspects of the business. The information and data will include the following issues:

  • Financial books, including receivables, loans, financial obligations, balance sheets, payables, incomes statements, and past tax filings.
  • Legal agreements and contracts.
  • Information on employees, including any employment contracts, salaries, benefit agreements, union contracts, and potential legal issues, such as wrongful termination or discrimination lawsuits.  A lawyer will help you avoid business litigation.
  • A current inventory.
  • The company’s reputation in the community and business world, including social media posts and campaigns.
  • The current advertising campaigns.
  • Any environmental issues related to the property that the business owns.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Clients Who are Selling a Business

Selling a business can be stressful, but we can help. Our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. can help you avoid legal issues when you are selling your business. We will make sure everything is in order. Call us at 215-574-0600 or complete our online form for an initial consultation. We are located in Philadelphia, and we serve clients throughout Pennsylvania and New Jersey.

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Why Do I Need a Lawyer for My Small Business?

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Lawyer Small Business

When a business is just getting off the ground, it can be tempting for a business owner to forgo unnecessary expenses. Oftentimes, having a lawyer on hand can seem like a superfluous use of limited financial resources. In other cases, engaging the services of a lawyer can prove to be an incredibly cost-effective business decision.

Many business owners who run into legal problems tend to wish they had a relationship with a lawyer they trust. It is worth meeting with a lawyer to get their take on what issues you might encounter and what services they may have to offer.

There are many reasons why having a lawyer might benefit a small business. Making choices about which items do and do not need a lawyer can be vital to keeping costs in check.

Budgeting

Many law firms offer legal services from a customizable menu of options that range from simple legal advice to complex business tort litigation. Having these options can allow small business owners to prioritize their legal needs and optimize the use of their business’s limited budget. A lawyer can also help with:

  • Financials: A small business owner that wants to ensure that any transfer or allocation of funds is handled in accordance with applicable laws might want to discuss the plans with a lawyer.
  • Buying or selling:  Business owners who are in negotiations to sell their business or to buy another company should involve a lawyer in the transaction.

Litigation

While it may not be necessary for every small business to have a lawyer on staff, there are several issues that should always be handled by one. These include:

  • Lawsuits: When former, current, or prospective employees sue, allegations of unfair hiring practices, employment discrimination, a hostile work environment, or other injustices can severely damage a small business.
  • Investigations into legal violations: A business that is being charged with breaking a law.
  • Environmental complaints: A small business that is being blamed for pollution or another type of environmental problem should have a lawyer handling the issue.

Tackle Small Business Issues

Outside of the legal issues listed above, there are also many business matters that may be handled without the help of a lawyer; however, seeking the help of a lawyer is generally recommended to ensure the business is protected. These small business issues may include:

  • Deciding how to organize the company
  • Partnership agreements
  • Corporate bylaws
  • Contracts
  • Labor laws
  • Real estate agreements
  • Licensing
  • Registration for tax purposes
  • Intellectual property protection

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Handle All Legal Matters for Small Business Owners

When it comes to certain business-related legal issues, it can be vital to have the help of a knowledgeable lawyer. Our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. can assist with business matters. Call us at 215-574-0600 or contact us online for an initial consultation. Located in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.

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Pennsylvania Supreme Court Strikes Down No-Hire Clauses

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No-Hire Clauses

On April 29, 2021, the Supreme Court of Pennsylvania decided that businesses could not enforce overly broad no-hire clauses and non-compete agreements entered into with other businesses. The ruling in Pittsburgh Logistics Systems, Inc. v. Beemac Trucking, 2021 WL 1676399 (Pa. Apr. 29, 2021) determined that companies cannot block employees from taking jobs with other companies via non-compete agreements that are created in business contracts between the two businesses. This creates a new precedent that resembles similar rules in neighboring states, like New Jersey.

At the heart of this case was the contract the two companies signed in 2010 that made Pittsburgh Logistics Systems, Inc. (PLS) a non-exclusive partner of Beemac Trucking (Beemac) to haul the freight of the former’s clients. PLS included non-solicitation and no-hire clauses, attempting to retain workers. However, Beemac still hired four of PLS’s employees. PLS then filed suit an sought an injunction to enforce the non-solicitation and no-hire provisions of the contract. The trial court denied PLS’s request for an injunction, and held that a no-hire provision in commercial contract between two companies violates public policy and is therefore unenforceable under Pennsylvania law. The Superior Court, sitting en banc, affirmed the trial court’s decision. The Supreme Court of Pennsylvania, narrowly affirmed the lower courts’ rulings, finding that, in this case, the contract between PLS and Beemac was overly broad because Beemac was precluded from hiring any PLS employee during the term of the contract and two years after regardless of whether the PLS employee had worked with Beemac during the term of the contract.

How Does This Ruling Affect Employee Rights?

In Pennsylvania, employees must consent to non-compete or no-hire clauses. Usually this happens when signing an initial employment contract. Employers must disclose the terms of the clauses upon entering the agreement. In this case, when the two companies entered their business contract in 2010, the employees of both were not parties to the deal. Without notifying the employees or gaining their consent, the non-compete agreement is voided. Had there been some input from the employees or some compensation promised by Beemac if they decided to hire PLS’s workers, that may have kept the contract clauses valid.

Since the language of the contract attempted to cover all of PLS’s employees, not just those working on matters related to Beemac and the business deal, the Court also found that to be too broad. The length of the non-compete clause, which extended two years beyond the established one-year term of the deal, was also found to be problematic.

The Court’s ruling put a spotlight on larger concerns, like the free competition for employees and the overall harm to the public. While acknowledging that PLS had an interest in retaining talent, the decision noted that the clauses went beyond the scope of protecting that interest. Instead, it not only violated established state laws, but it created a probable harm to the public good. The Court determined restraining trade and limiting the labor market took importance over PLS’s interests as an employer.

This ruling could have significant impact as more people return to the workforce as the Coronavirus (COVID-19) shutdowns end and more businesses seek normalcy. While employers try to entice those unemployed back to jobs, this has started to create bidding wars that benefit workers.

For those offered new deals, it is important to scrutinize these contracts. Know the terms of employment, especially any non-compete agreements, that may preclude leaving for another position with better pay, conditions, or other arrangements.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Help Negotiate Business Contracts

Contract negotiations can be confusing and stressful. Even for well-prepared professionals who know their values, there can be concerns. A trusted Philadelphia employment lawyer at Sidkoff, Pincus & Green P.C. can protect your interests. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Based in Philadelphia, we proudly serve hard-working residents throughout Pennsylvania and New Jersey.

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How Do I Avoid Fraud as a Business Owner?

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Fraud

If you own a business, there is a great possibility that you are going to encounter an issue of fraud. When you do, it is going to be paramount that you understand how to mitigate any monetary damages, along with associated risks that your company’s reputation may suffer in the process.

Your best defense against fraud will be your ability to be knowledgeable on the subject. Being aware of what signs to look for can help your business avoid the pitfalls of scams. Listed below are compiled tips to help avoid business tort litigation involving fraud.

Tactics Employed by Scammers

A great way to deter fraudsters from coming after you is to try and understand their methods of operation. Fraud usually occurs because a scammer is able to build a foundation of trust that will provide them an avenue to get the information they need to gain access to your company. 

Another tactic they use is creating a fast-paced environment that forces you to make quick decisions without any research. Scammers will use fear and intimidation to get their way and con you out of money by having you send them payments that are untraceable. Often, these payments involve wire transfers, digital currency, reloadable cards, or gift cards, making them difficult to track.

Protect Your Business

Inform your employees that you have a plan to deal with potential fraudsters who may be trying to con your business. Encrypt passwords and never send sensitive information through emails that can be siphoned by scammers. Build a rapport with your employees, especially those that interact with finances. You are putting a lot of faith in employees who handle accounting duties, and you should run thorough background checks on them.

When paying bills, make sure that you can verify invoices, payments, and other expenses. Go over the way you handle payments with anyone on your staff who is authorized to sign off on your behalf, and stick to the system at all times. Delegate accounting duties to at least two people within your company to avoid having one person having total access to the books.

Nowadays, a lot of fraud occurs online, so it is in your best interest to be technologically proficient. Never open an email that may contain attachments of files that could contain malware that will attack your computer systems. Hackers can also damage your standing in the community by intercepting your social media accounts and relaying malicious information. In an effort to minimize risks, secure your company’s files, passwords, and financial information.    

You can also protect your business by implementing a mandatory vacation schedule and instituting a medium, whether through email or phone, where a fellow employee can anonymously report any suspicious activity.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Business Owners Avoid Fraud

When you put effort into running an effective business, nothing can be more disheartening than someone threatening your livelihood. Fraud can seep into all aspects of your business and derail your operations. However, our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. can help you. Call us at 215-574-0600 or complete our online form for an initial consultation. We are located in Philadelphia, and we serve clients throughout Pennsylvania and New Jersey.

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What are the Paycheck Protection Program Loan Updates?

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Paycheck Protection Program

In 2020, the federal government approved a $900 billion relief package due to the Coronavirus (COVID-19) pandemic. This package included the Economic Aid Act to help small businesses, nonprofits, and venues keep their companies running. Essentially, the Economic Aid Act made billions of dollars available to entities under the Paycheck Protection Program (PPP) in the form of low-interest loans through selected lenders. Those granted loans could then apply for loan forgiveness within 10 months from the end of their covered loan period.

It is important to note that the PPP ended on May 31, 2021, when the Small Business Administration (SBA) announced that funding had been exhausted. The information that follows is meant to help current loan grantees better understand the nuances of their loans and how to apply for forgiveness.

First or Second Round of the Paycheck Protection Program

Certain loan grantees may qualify for a second draw loan of up to $2 million. To meet the requirements, the organization must have fewer than 300 employees, used or will soon use the entire amount of the first loan, and has a decline in gross receipts of at least 25 percent in any quarter of 2020 when compared to the same quarter of 2019. Economic Injury Disaster Loan (EIDL) advances received by borrowers are no longer deducted from their PPP loan forgiveness amount.

New Business Entities

New business entity types became eligible to apply for PPP loans in the second round, including:

  • Chambers of commerce
  • Trade organizations
  • Nonprofits or government instrumentalities that engage in destination or tourism
  • Owners who are delinquent on student loans
  • Noncitizens who are U.S. residents
  • Owners with non-fraud related felony convictions

Like the first round, the second round continues to include these eligible entities:

  • Self-employed
  • Sole proprietors
  • Independent contractors
  • Seasonal businesses
  • Nonprofit organizations
  • Housing cooperatives
  • Veterans organizations

The first PPP round required funds to be used for expenses, such as rent, payroll, utilities, employer-sponsored health insurance, and other eligible costs. The second round still includes these plus additional forgivable expenses:

  • Operational expenses:For Human Resources, accounting software, and cloud computing.
  • Property damage: Costs related to public disturbances in 2020 not covered by the organization’s business insurance.
  • Supplier costs:For payments made to suppliers before receiving the PPP loan needed to keep the business running.
  • Worker protection costs: COVID-19 worker safety expenses, facility modifications, and supplier costs related to COVID-19 protections.

Current PPP Loan Forgiveness Requirements

The following requirements from the first round and later are still in effect:

  • The loan must be used to cover payroll costs and other qualifying expenses over the eight- to 24-week period after the loan is made.
  • The borrower can choose a covered period from eight to 24 weeks and submit the forgiveness application before the end of the 24 weeks if they use PPP funds early.
  • Employee staffing and compensation levels must be maintained for loans greater than $50,000. PPP loans under $50,000 are exempt from workforce and wage reductions.
  • Borrowers are eligible for full loan forgiveness if they use at least 60 percent of loan proceeds for payroll expenses, with no more than 40 percent going to qualifying expenses unrelated to payroll.

If a business is experiencing loan issues, it is advisable to speak to a lawyer. A lawyer can assist with business tort litigation matters.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Business With Loans

PPP loans and other government-sponsored programs can be complex. Requirements change often, and businesses need to try to stay on top of them or risk not following the correct procedures. A Philadelphia business lawyer at Sidkoff, Pincus & Green P.C. can address your concerns. Contact us online or call us at 215-574-0600 for an initial consultation. Located in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.

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Pennsylvania Supreme Court Strikes Down No-Hire Clauses

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hire-clauses

Earlier this month, the Supreme Court of Pennsylvania decided that employers could not enforce overly broad no-hire clauses and non-compete agreements. The ruling on Pittsburgh Systems, Inc. v. Beemac Trucking determined that companies cannot block employees from taking jobs with other companies via non-compete agreements that are created in business contracts. This creates a new precedent that resembles similar rules in neighboring states, like New Jersey.

At the heart of this case was the contract the two companies signed in 2010 that made Pittsburgh Logistics Systems, Inc. a non-exclusive partner of Beemac Trucking to haul the freight of the former’s clients. Pittsburgh included non-solicitation and no-hire clauses, attempting to retain workers. However, Beemac still hired four of Pittsburgh’s employees. The Court ruled that this was acceptable, as the terms of the contract were too broad and did not directly involve the affected employees. This creates a risk to public harm and restraints on trade and free labor, which the Court determined outweighed any concern or interest Pittsburgh had for keeping their employees.

How Does This Ruling Affect Employee Rights?

In Pennsylvania, employees must consent to non-compete or no-hire clauses. Usually this happens when signing an initial employment contract. Employers must disclose the terms of the clauses upon entering the agreement. In this case, when the two companies entered their business contract in 2010, the employees of both were not parties to the deal. Without notifying the employees or gaining their consent, the non-compete agreement is voided. Had there been some input from the employees or some compensation promised by Beemac if they decided to hire Pittsburgh’s workers, that may have kept the contract clauses valid.

Since the language of the contract attempted to cover all of Pittsburgh’s employees, not just those working on matters related to Beemac and the business deal, the Court also found that to be too broad. The length of the non-compete clause, which extended two years beyond the established one-year term of the deal, was problematic.

The Court’s ruling put a spotlight on larger concerns, like the free competition for employees and the overall harm to the public. While acknowledging that Pittsburgh had an interest in retaining talent, the decision noted that the clauses enforced went beyond the scope of protecting that interest. Instead, it not only violated established state laws, but it created a probable harm to the public good. The Court determined restraining trade and limiting the labor market took importance over Pittsburgh’s interests as an employer.

This ruling could have significant impact as more people return to the workforce as the Coronavirus (COVID-19) shutdowns end and more businesses seek normalcy. While employers try to entice those unemployed back to jobs, this has started to create bidding wars that benefit workers.

For those offered new deals, it is important to scrutinize these contracts. Know the terms of employment, especially any non-compete agreements, that may preclude leaving for another position with better pay, conditions, or other arrangements.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Help Negotiate Business Contracts for Workers

Contract negotiations can be confusing and stressful. Even for well-prepared professionals who know their values, there can be concerns. A trusted Philadelphia employment lawyer at Sidkoff, Pincus & Green P.C. can protect your interests. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Based in Philadelphia, we proudly serve hard-working residents throughout Pennsylvania and New Jersey.

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