If your employees have access to sensitive or confidential information, it’s likely you required your employees to sign non-competition agreements. Pennsylvania courts don’t look favorably on non-competes and, as a result, they have placed certain limitations on the ways employers can limit their former employees. In the words of Pennsylvania courts, a non-compete must be reasonably limited in both temporal and geographic scope. In other words, your agreement may only last for a reasonable amount of time and it cannot cover a geographic area that is greater than necessary to protect your business interests.
The issue of temporal scope is not all
that complicated and courts won’t have a problem with limitations on employment lasting one or two years. However, the issue of proper geographic scope can be much more difficult to determine. So, instead of trying to determine your geographic footprint and/or the area in which your employee operates, let me suggest an alternative: don’t use a geographic scope.
Now I’m not suggesting that your non-compete should be unlimited in scope, because that will never pass judicial review. Rather, you should create a list of competitors and other employers that could benefit from the confidential information that your employee possesses and limit the former employee from joining those companies for a set period of time. Just be sure that your list of competitors is limited only to those who would truly benefit from your former employee’s knowledge, because if your agreement is challenged, you may be required to explain why each company is included on the list.
Additionally, your list should include a “catch-all” provision allowing you to supplement the list if a new competitor enters the market between the time that your employee signs the non-compete and the employee leaves your employ. Alternately, you could amend your non-competes and require employees to sign a new one when you amend it, provided you offer sufficient consideration each time you ask your employees to sign a new agreement. Of course, this approach requires you to keep an up-to-date list of competitors.
By limiting the former employee from joining your competitors, you can prevent the dissemination of your confidential information, while narrowly tailoring your restrictions in a way that will pass judicial muster. And, just as importantly, the agreement is fair to former employees, who can go work for an employer in the same area where your confidential information won’t be used against you.