Category: Non-Compete Agreements

FTC Votes to Ban Non-Competes

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Our Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Will Help Your Company Stay Compliant

In an unprecedented move, the Federal Trade Commission (FTC) has voted to ban non-compete agreements in most situations. This decision marks a significant shift in employment and contract law, which could have wide-reaching implications for business owners across the United States, including those operating within Philadelphia.

Non-compete agreements have long been a tool for businesses to protect their interests. These agreements typically prevent employees from joining competitors or starting competing businesses within a certain period after leaving a company. However, the FTC’s recent decision challenges the traditional use of non-competes, arguing that they stifle competition, hinder innovation, and limit workers’ mobility and earning potential.

The FTC’s ruling broadly prohibits using non-compete clauses in most employment contracts. This means that employers will no longer be able to include these clauses in new hires’ contracts and must also eliminate them from existing agreements. The decision is rooted in the belief that such restrictions limit employees’ job prospects and contribute to wage stagnation.

The FTC’s Decision: A Crucial Consideration for Philadelphia Business Owners

For Philadelphia business owners, the FTC’s decision necessitates reassessing how they protect their business interests and proprietary information. With the traditional non-compete agreement off the table, businesses need to explore alternative strategies. These might include:

  • Strengthening confidentiality agreements.
  • Utilizing non-disclosure agreements (NDAs) more effectively.
  • Focusing on non-solicit agreements that prevent former employees from poaching clients or colleagues.

Business owners must understand that while the landscape changes, there are still viable means to safeguard their business. The key lies in adapting to the new legal framework without compromising on protecting business assets.

Navigating the Changes

Adapting to this significant change requires a nuanced understanding of legal and practical implications. Business owners should consider the following steps:

  • Conducting a thorough review of existing employment contracts is imperative. This step is crucial to identify and amend non-compete clauses that now fall outside legal bounds. Business owners should work closely with legal experts to ensure this process is comprehensive and fully compliant with the FTC’s ruling.
  • Consultation with a knowledgeable business law firm becomes indispensable. Legal counsel can offer invaluable insights into the ban’s implications for your industry and business model. They can also suggest robust alternatives to non-compete agreements, such as enhanced confidentiality agreements, non-disclosure agreements, and non-solicit clauses. These tools can serve as effective safeguards for your proprietary information and client relationships in the absence of non-competes.
  • Developing new strategies will involve retraining your focus toward creating a workplace environment that incentivizes loyalty and reduces turnover. Consider implementing measures such as career development opportunities, competitive compensation packages, and fostering a positive company culture. These initiatives can make your company a more attractive workplace, thereby naturally discouraging employees from leaving to work with competitors.

The ban on non-competes signals a major shift in how businesses will operate and protect their interests in the future. While the change may seem daunting initially, it also presents an opportunity for businesses to innovate and find new ways to maintain competitiveness and secure proprietary information.

Our Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Will Help Your Company Stay Compliant

The FTC’s decision to ban non-compete agreements represents a landmark change in employment and business law. For business owners in Philadelphia, staying ahead means understanding the implications of this decision and swiftly adapting to the new legal landscape. It will be essential for businesses to explore alternative ways to protect their interests while complying with the new rules. Speak with our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. about how we can help you. Contact us online or call us at 215-574-0600 to schedule a consultation. Located in Philadelphia, we serve clients in Pennsylvania and New Jersey, including South Jersey.

What Legal Measures Can Businesses Take to Enforce Non-Compete Agreements?

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Our Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Will Help You Navigate Non-Compete Enforcement

Protecting trade secrets and maintaining a competitive edge are paramount. Non-compete agreements serve as a critical tool for businesses to safeguard their interests. However, the effectiveness of these agreements hinges on their enforceability. This blog explores the legal measures businesses can take to enforce non-compete agreements, ensuring the protection of their assets and interests.

Understanding Non-Compete Agreements

Non-compete agreements are legal contracts that restrict employees from competing with their employer during or after their employment period. These agreements protect a company’s sensitive information, including trade secrets, client lists, and business strategies. For a non-compete agreement to be enforceable, it must be reasonable in scope, geography, and duration and serve a legitimate business interest.

Businesses utilize non-compete agreements to secure their competitive advantage and protect sensitive information. These legal contracts prevent employees from joining or starting a competing business within a specified period and geographic area after leaving the company. The rationale behind non-compete agreements is to safeguard trade secrets, proprietary knowledge, and client relationships that employees gain access to during their tenure. By restricting former employees’ ability to work with competitors, businesses aim to minimize the risk of losing valuable intellectual property and maintain their market position.

Non-compete agreements also serve as a deterrent against potential breaches of confidentiality. They ensure that employees understand the seriousness of handling sensitive information and the consequences of misusing it. These agreements can help retain talent by discouraging employees from joining competitors, thus protecting the investment made in their training and development.

Legal Action for Breach

When employees violate a non-compete agreement, the employer can take legal action. The first step involves sending a cease-and-desist letter to the former employee, demanding an immediate halt to the competitive activities. If the employee continues to breach the agreement, the employer can file a lawsuit seeking injunctive relief and damages.

Injunctive Relief

Injunctive relief is a court order that compels the breaching party to stop specific actions. With non-compete agreements, this could mean ordering the former employee to cease working with a competitor or starting a competing business. Injunctive relief is a powerful tool, providing immediate protection to the employer’s interests.


Employers can also seek damages for losses incurred due to a non-compete agreement breach. Damages may include lost profits, the cost of replacing the employee, and any decrease in customer base or goodwill. Calculating damages requires thoroughly analyzing the breach’s impact on the business.

Negotiation and Settlement

In some cases, litigation may not be the most efficient or desirable solution. Employers and employees can negotiate a settlement that addresses the breach while avoiding the costs and time associated with a court battle. Settlements can include financial compensation, modifications to the non-compete terms, or other arrangements that satisfy both parties.

Best Practices for Enforceability

To ensure the enforceability of non-compete agreements, employers should:

  • Clearly define the scope, geography, and duration of the restriction.
  • Tailor the agreement to protect legitimate business interests.
  • Regularly review and update non-compete agreements to reflect law or business operations changes.

Our Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Will Help You Navigate Non-Compete Enforcement

Non-compete agreements protect your business, but their enforceability depends on careful drafting and strategic enforcement. Sidkoff, Pincus & Green P.C. advises business owners on all aspects of non-compete agreements. Our experienced Philadelphia business lawyers can help you draft, review, and enforce non-compete agreements to safeguard your interests. If you face challenges with enforcing a non-compete agreement or need guidance on creating an enforceable contract, do not hesitate to contact us. Complete our online form or call us at 215-574-0600 to schedule a consultation. Located in Philadelphia, we proudly serve clients in New Jersey and Pennsylvania, including South Jersey.

Can Non-Compete Agreements be Banned?

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The Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Protect Your Rights as an Employee.

Recently, the Federal Trade Commission (FTC) announced that non-compete agreements could be banned, removing the standard workplace practice of restricting a worker’s ability to move between jobs. These contracts have been used in the past to protect companies’ trade secrets and other confidential corporate information by preventing employees from leaving for a rival company, competing with their current employer, or sharing confidential information.

The FTC states that these agreements can restrict innovation and harm workers’ ability to earn more money. With this in mind, it is essential to look at the pros and cons of banning non-compete agreements, both for employers and employees.

What is a Non-Compete Agreement?

In today’s competitive business landscape, non-compete agreements are becoming an increasingly common way for employers to protect their trade secrets and other confidential information from competitors. These contracts usually involve a worker agreeing not to leave the company and join a rival business or take advantage of any opportunities with a competitor within a specified period of time. Additionally, they may also include clauses restricting employees from developing inventions using the same skills they acquired while working at their current job.

The purpose of non-compete agreements is to ensure that employees do not leave their current company with confidential information or use knowledge gained on the job to benefit other companies. On the flip side, some argue that these contracts can be overly restrictive and ultimately limit employees’ ability to progress in terms of wage increases or future opportunities. Ultimately, it is up to companies and their workers to determine if and when non-competition contracts should be used‌ and whether the FTC formally bans them as a corporate practice.

Pros of Banning Non-Competes

From an employee standpoint, one main benefit of banning non-compete agreements is that they will no longer feel restricted from pursuing new opportunities. This means they can join rival companies or pursue higher wages without fear of legal repercussions. Additionally, these individuals will have increased freedom to innovate, as they won’t be limited by any clauses restricting their actions.

For companies, a ban on non-compete agreements could result in access to a larger pool of qualified candidates and new ideas. Since the best talent may not want to work under conditions that limit their future opportunities, this would give them more incentive to come work for a new company. Moreover, having a wider selection of job applicants could create greater competition between potential employees, which could lead to better quality work overall.

Cons of Banning Non-Competes

Despite the potential benefits mentioned above, there are some downsides to banning non-compete agreements for both parties involved. For instance, it may become easier for former employees who know sensitive information about your business to leave with it and use it against your company if they move onto a new organization within the same industry. Thus, businesses need access to legal recourse if this situation arises.

Employers may argue that a ban on non-competes would make it too difficult for them to retain their top talent, since nothing would prevent them from going elsewhere. Companies might also worry that without any restrictions on development outside the workplace, some employees may contribute their own ideas towards competitors instead of developing new ones specifically for their current employer’s use.

The Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Protect Your Rights as an Employee

To discuss your legal options, speak with the Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. Contact us online or call us at 215-574-0600. With offices in Philadelphia, we proudly serve our neighbors in South Jersey, Pennsylvania, and New Jersey.

Pennsylvania Supreme Court Considers Validity of Noncompete Agreements

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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.

Court Ruling Addresses Attorney-Client Relationships

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Philadelphia litigation lawyers assist clients with attorney-client privilege issues.In 2011, physician George R. Bousamra sued Excela Health for defamation after a peer-review investigation conducted by the company revealed that Bousamra performed surgical procedures on over 100 patients whose medical condition may not have warranted surgery. Before announcing the investigation, Excela’s general counsel spoke about the investigation with outside counsel to determine the best legal course of action. Excela’s general counsel shared certain information with an outside public relations firm that the company used for crisis management. The Pennsylvania Supreme Court ruled that an organization may not disclose privileged information to the general population, or its adversaries.

During the trial, Excela tried to use the attorney-client privilege argument and the attorney work product doctrine to protect the communications from disclosure. However, Bousamra argued that Excela waived any privilege when the company’s general counsel shared information with the outside public relations firm. The Supreme Court held that Excela did waive the attorney-client privilege, but not the attorney work product doctrine when the general counsel forwarded an email to outside counsel.

PA Supreme Court Sets New Standard for Attorney Work Product Doctrine

The Pennsylvania Supreme Court looked closely at the communications that were sent from Excela to outside counsel, and considered them to be attorney work product, but the Court needed to further examine whether Excela gave up those protections when they sent the communications to the public relations firm. The Court set forth a new standard in Pennsylvania for waiver of the attorney work product doctrine by holding that the attorney work product doctrine is only waived by disclosure if the work is disclosed in a way that increases the likelihood that an adversary would obtain it. The Supreme Court returned the case to the trial court to determine whether Excela waived the attorney work product doctrine protections. The trial court has not yet ruled on whether Excela increased the likelihood that Bousamra would have access to Excela’s communications.

The Supreme Court held that Excela waived the attorney-client privilege when it forwarded a privileged email to the third party. The Court agreed that there may be instances when an attorney will need to include a third party on privileged information to provide legal advice. However, the Court found that the purpose of forwarding the communications was not to provide legal advice, but for public relations management. Therefore, the Court found that Excela waived the attorney-client privilege over the otherwise-privileged emails.

The following are important take-aways from the Bousamra v. Excela Health case:

  • Organizations should educate their employees about attorney-client privilege and the attorney work product doctrine.
  • Be careful about communications that offer legal advice or educate employees about how to identify privileged information.
  • Think twice before sending documents to a third party.
  • Mark all communications that address legal matters as confidential.
  • Third-party individuals receiving communications about legal matters should sign a non-disclosure agreement.

Philadelphia Litigation Lawyers at Sidkoff, Pincus & Green P.C. Assist Clients with Attorney-Client Privilege Issues

If you need assistance with a legal matter involving attorney-client privilege, contact the Philadelphia litigation lawyers at Sidkoff, Pincus & Green P.C. We have extensive experience in these types of cases, and we will work tirelessly to protect your rights and your company’s privileged information. To schedule a confidential consultation, call us today at 215-574-0600 or contact us online. Located in Philadelphia, we serve clients throughout South Jersey, Pennsylvania, and New Jersey.

Pennsylvania Proposes Restrictions on Non-Compete Agreements

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Pennsylvania is proposing to become one of several states where the use of non-compete agreements will be restricted.

After Massachusetts, New York City, and New Jersey introduced bills designed to protect workers from the dangers of non-compete agreements, New Hampshire, Vermont, and Pennsylvania have continued this trend by introducing proposals that will limit the use of these agreements.

If passed, the Pennsylvania and Vermont bills will ban all non-compete agreements in ordinary employee relationships. The New Hampshire bill was defeated in March 2018.

Prohibiting Non-Compete Agreements

The Vermont bill and the Pennsylvania bill both will prohibit all non-compete agreements, with the exception of those having to do with the sale of a business or dissolution of a business partnership. In the Vermont bill, the description of the prohibited agreement does not clarify whether both non-solicitation agreements and non-compete agreements are prohibited, or just non-competes.

The Pennsylvania house bill is similar to the Vermont bill in that it prohibits all “covenants not to compete,” with the exception of those that arise from the sale of a business or the dissolution of a partnership or limited liability company. However, Pennsylvania’s HB 1938 defines the “covenant not to complete” as an agreement between an employer and an employee that discourages the employee from seeking employment elsewhere.

As a result, non-disclosure and non-solicitation agreements are outside the ban. HB 1938 also includes a clause that relates to judicial recourse and choices of law and venue.

If an employee files a lawsuit against their employer, and wins, the bill includes a provision that allows the employee to recover attorney fees and damages, including punitive damages. HB 1938 does not offer any recommendations for the standards that should be used to determine whether damages should be awarded. In addition, it does not offer guidance on the amount of damages the employee should receive if punitive damages are awarded.

Additional Bill Provisions

HB 1938 also requires all non-compete cases that involve a Pennsylvania resident be decided upon in a Pennsylvania court under Pennsylvania law. This means that the parties involved may not negotiate an alternate venue, or a conflicting choice of law.

In addition, parties may not file in federal court, even if the conditions for federal jurisdiction are met. The only other states that have non-compete bans as broad as Vermont and Pennsylvania propose to enact are California, North Dakota, and Oklahoma.

The last action on this bill was referral to the Pennsylvania General Assembly’s Labor and Industry committee, where it has remained for over a year.

Philadelphia Employment Lawyers at the Law Offices of Sidkoff, Pincus & Green P.C. Represent Employees in Non-Compete Cases

If you were required to sign a non-compete agreement, and you have questions about how that impacts your employment, it is in your best interest to contact the Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. We will address all of your questions and concerns, including the enforceability of a restrictive covenant. Our skilled legal team will protect your rights and secure the maximum financial compensation you deserve. To schedule a confidential consultation, call us today at 215-574-0600 or contact us online. Our offices are conveniently located in Philadelphia, where we serve clients in Pennsylvania, South Jersey, and across New Jersey.

Eastern District Dismisses Breach of Contract Claim Against Former Employee for Alleged Violation of Non-Compete

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In Sales Benchmark Index LLC v. DeRosa, SBI sued DeRosa after he resigned from the company and went to work for another company. No. CV 18-2680, 2018 WL 3918090, at *1 (E.D. Pa. Aug. 16, 2018). SBI claimed DeRosa was in violation of the non-compete provision within his employment agreement by providing the same or substantially the same duties at the new employer; however, SBI did not allege the subsequent employer was a competitor of SBI, but that DeRosa himself was competing. The relevant portion of the agreement stated:

“Employee shall not directly or indirectly, in any Capacity, engage in Restricted Activities for a Competing Business[.]” “Restricted Activities” are “work activities, duties and/or responsibilities” that are “the same as, substantially similar to, or include,” the type of activities an employee had with SBI, including “sales and/or marketing advisory and/or consulting services.”

The Court’s analysis of this issue required a resolution to whether or not DeRosa was providing the same or substantially similar services for the subsequent employer, as he did when he was with SBI. To classify as a competing business, thereby creating a potential violation of the non-compete, the agreement defined a “Competing Business” as:

[A]ny Person in the business of providing sales and/or marketing advisory and/or consulting services, including businesses that supply, manufacture, produce, design, sell and/or market, as applicable, products and/or services which are the same or substantially similar to the products and/or services that [SBI] … supplied, manufactured, produced, designed, sold and/or marketed during the Reference Period. Businesses that engage in Competing Business include … the Employee operating Employee’s own business in any Capacity.

SBI attempted to argue DeRosa should be considered a “Competing Business” for purposes of an alleged breach of the non-compete. The Court refused to accept SBI’s argument, that the agreement prevents DeRosa from doing the same or substantially the same duties for a competing business. The Court noted that nowhere in the complaint did SBI allege the DeRosa ran his own business.

Since the Complaint failed to show DeRosa was not personally competing with his new employer, and SBI did not claim the new employer is a competitor, the Court dismissed the breach of contract claim for a violation of the non-compete.

Philadelphia contract lawyers at the Law Office of Sidkoff, Pincus & Green P.C. protect employees’ right to work. For assistance in any type of employment law matter, call 215-574-0600 to schedule a consultation in our Philadelphia office, where we represent clients in Pennsylvania and New Jersey, or contact us online.

Unlimited Geographic Restriction in Non-Compete Agreements may be Void

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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.

Superior Court of Pennsylvania Upholds Employer’s Non-Compete Agreement That was Incidental to Employment and Reasonable in Time and Scope

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In Tyco Fire Products, L.P. v. Fuchs, the Superior Court of Pennsylvania held that Tyco Fire Products, L.P.’s (“Tyco”) non-compete agreement was enforceable against its former employee (“Fuchs”). 2017, WL 5509889 (Pa. Super. 2017). Tyco designs, manufactures, and distributes fire protection products such as chemical water and other fire preventative measures.  Fuchs worked as a senior sales manager for Tyco for approximately ten years. During his time at Tyco, Fuchs signed a Confidentially Agreement and a Non-Competition Agreement (the non-compete agreement). This non-compete agreement stated that Fuchs may not “employ, engage, or enter into employment” with any competing business in the Northeast (including 11 states) for a period of 12 months.  After his resignation in 2016, Fuchs began work at Reliable Automatic Sprinkler Company, Inc. which engages in the same type of business as Tyco. While employed at Reliable, Fuchs contacted former Tyco customers and engaged in business inside of the restricted zone of the non-compete.

When analyzing a non-compete agreement, the court will determine if the agreement is “incident to an employment relationship between the parties; the restrictions imposed by the covenant are reasonably necessary for the protection of the employer; and the restrictions imposed are reasonably limited in duration and geographic extent.”  Fuchs argued that Tyco’s non-compete agreement was unreasonably broad in both duration and geographic location.

The Court rejected Fuchs’ argument and found that the Tyco Agreement was enforceable under the required analysis. The Court ruled that the agreement was incidental to an employment relationship because of his actual employment as a sales manager for Tyco. Secondly, the Court ruled that Tyco’s agreement was reasonably necessary to protect Tyco’s legitimate business interests. In ruling on this issue, the Court looked to the fact that Reliable was in the same business as Tyco and Fuchs’ contact with the Tyco customers during his time at Reliable clearly show that there was a need to protect legitimate business interests. Lastly, and most importantly, the Court found that the 12-month (1 year) limitation was well within the reasonable limitations period and the 11-state geographic restriction was reasonable because Fuchs’ had conducted business in all restricted states during his time at Tyco. Thus, the Court ruled in favor of Tyco and affirmed the trial court’s decision.

Philadelphia non-compete lawyers at Sidkoff, Pincus & Green P.C. protect employees’ right to work. For assistance in any type of employment law matter, call 215-574-0600 to schedule a consultation in our Philadelphia office, where we represent clients in Pennsylvania and New Jersey, or contact us online.

Pennsylvania Superior Court Rules in Favor of Employee in a Covenant Not to Compete Case Because Company had no Protectable Business Interest in Information Available in the Public Domain

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In Wolfington Body Company, Inc. v. O’Neill, the Pennsylvania Superior Court found in favor of the employee, Defendant O’Neill, holding that the covenant not to compete, which Wolfington Body Company made O’Neill sign as a condition of his employment agreement, was unduly restrictive and overly broad. Wolfington Body Company, Inc. v. O’Neill, 2018 WL 2011398 (Pa. Super. 2018).

O’Neill began working for Wolfington Body Company in the fall of 2013 as a commercial vehicle sales person. Once hired, Wolfington required O’Neill to sign an Employment Agreement which contained several restrictive covenants including Non-Compete and Non-Solicitation Covenants. These covenants included language which restricted where O’Neill could work once he left Wolfington, and how long he must wait before working in the bus sales industry again. The covenant restricted O’Neill from working in any state which Wolfington is conducting or has conducted business. This restriction functionally prohibited O’Neill from working in the 35 states in which Wolfington has or had done business. In addition, the covenant not to compete prohibited O’Neill from working for two years in the bus sales industry after he left Wolfington. In the fall of 2016, O’Neill left Woflington and began working for another company in the bus sales industry. Wofington brought a suit alleging that O’Neill violated the restrictive covenants of his Employment Agreement, specifically that the O’Neill had access to Wolfington’s confidential, proprietary, or trade secretes which are legitimate business interests worthy of protection. O’Neill t testified that based on his long employment history in the bus sales industry, he had compiled information including a customer base, and price estimates for building busses.  However, O’Neill asserted that he returned all confidential information to Wolfington before ending his employment.

In analyzing whether to enforce a restrictive covenant, the Court looks to see if, “… it must be reasonably related to the protection of a legitimate business interest… including trade secretes or confidential information, unique or extraordinary skills, customer good will, and investments in an employee specialized training program. In contrast, a post-employment covenant that merely seeks to eliminate competition per se to give the employer an economic advantage is generally not enforceable.”  For a restrictive covenant to be enforceable, there must be the presence of a legitimate protectable business interest.  Once it is established that a legitimate protectable business interest is present, the court applies a balancing test weighing the employer’s protectable business interest against the employee’s interest in earning a living. Then the court balances the employer and employee interests against the interest of the public.

Here, the Court found that the information necessary to enable an experienced sales person to perform their job are readily available in the public domain, therefore the information retained by O’Neill was of no secret value or of any peculiar importance to Wolfington. Additionally, the definition of confidential information set forth in the employment agreement was overly broad and included any information that O’Neill may have learned while working for Wolfington thus, the restrictive covenant was not reasonably tailored to protect Wolfington’s business interests. For a restrictive covenant to be enforced there must be the existence of legitimate business interest, and the restrictive covenant must be reasonably tailored to protect the employer’s interests.  Wolfington failed to establish that the restrictive covenant was reasonably tailored, even if there were legitimate business interests at stake worth protecting. Since neither of these two necessary factors are present, the Court found in favor of O’Neill.

Philadelphia non-compete lawyers at Sidkoff, Pincus & Green P.C. protect employees’ right to work. For assistance in any type of employment law matter, call 215-574-0600 to schedule a consultation in our Philadelphia office, where we represent clients in Pennsylvania and New Jersey, or contact us online.

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