Employees and independent contractors who sign contracts without fully understanding the content may jeopardize their livelihood. Non-compete clauses in contracts are generally enforceable. Accordingly, you should read and understand the non-competition clause’s provisions in order to make an intelligent decision about whether the benefit of the contract is worth the risk. If you’re not confident you understand what the contract says, then a consultation in our Yardley, PA or our New Jersey office will be well worth avoiding an unpleasant surprise later on.
Non-compete clauses in employment agreements must be reasonable in scope and duration to be enforceable. Generally, courts have held a period of up to two years to be a reasonable duration. Courts will closely scrutinize any contract seeking to prevent competition in excess of two years. Nevertheless, for the employee, being unable to work for two years can be punitive enough.
The more difficult analysis is the reasonableness of the scope of a non-compete clause. When conducting such an analysis, the courts will consider geography as well as the specific duties of the job itself. For example, a company whose clients are located only in Pennsylvania, New Jersey and Delaware cannot prohibit a former employee from working for another company anywhere on the East Coast. And a boutique women’s fashion shop who hired an employee to sell women’s clothing may not be able to prevent the employee from working for a company that sells men’s clothing. Typically, the conflict arises when the employee attempts to work for someone else. The courts will look at the old job and the new to determine whether the employee is “in competition” as defined by the language of the non-competition clause.
Like any contract, the language of a non-competition clause can be negotiable. If you have concerns about whether the language of a clause in a contract you are asked to sign may impair your marketability to a future employer, the time to address that concern is before you sign the contract! If you have any questions regarding your employment, contact The Fegley Law Firm at (215) 493-8287 or email Scott Fegley at [email protected]. We give you peace of mind!