Non-compete agreements have become increasingly controversial in recent years, and as a result, more employees are questioning whether the contracts they signed are truly enforceable.

For employers, this means that it’s important to ensure that the clauses they’re including in their agreements aren’t too broad or considered unreasonable. In Pennsylvania, the courts have been using a nuanced approach that balances employers’ legitimate business interests with employees’ rights to work and earn a living.

The primary framework for determining whether a non-compete agreement is enforceable rests on three key elements: reasonableness, legitimate business interests, and geographic and temporal scope.

Courts first examine whether the terms of a non-compete agreement are truly protecting a legitimate business interest. To uphold a contract’s terms, judges generally want to see that they are protecting trade secrets, confidential information, customer relationships, and/or specialized training provided to the employee. The agreement must be designed to safeguard these interests without unduly restricting the employee’s ability to work.

The geographic scope of the agreement must also be reasonable and, more importantly, must be clearly related to the employer’s actual business operations. Courts will look closely at whether the restricted area corresponds to the employer’s market reach and the employee’s specific role. When geographic limitations go beyond the employer’s market and prevent an employee from working in areas where the employer has no actual presence, it will likely be deemed unenforceable and may be viewed as punitive. Likewise, the duration of a non-compete must be no longer than what’s necessary to protect the employer’s legitimate interests. Pennsylvania courts typically look askance at agreements lasting more than two to three years, though this can vary depending on industry and specific circumstances.

Courts will also consider whether a noncompete poses potential harm to the public interest and will invalidate an agreement if it creates an unreasonable hardship on the employee or potentially harms consumers by limiting professional services. Employers cannot prevent fair competition or restrict an employee’s right to work by disguising their attempt within a non-compete contract.

When a non-compete agreement is considered overly broad, the court may modify it, striking out unreasonable provisions and preserving the rest rather than invalidating the whole thing.

If you need assistance with crafting a non-compete agreement that will protect your business and hold up in court, we can help. Contact us today to set up a time to discuss your situation.