Non-compete agreements are utilized by employers in order to restrict where and who their employees can work for after they are fired or quit.
In Socko v. Mid-Atlantic Systems of CPA, the Superior Court held that an employer is required to give an employee additional consideration in exchange for signing a non-compete agreement if the employee already works for that employer at the time the non-compete agreement is signed.
When the promise restricting employment is contained within the employment agreement signed by the employee at the time the employee is hired, the Superior Court noted that consideration for the promise is the job itself.
However, when the promise is added to an existing employment relationship, the Superior Court believed that the employee must receive an additional benefit, such as a raise or bonus, or a change in job status (i.e., promotion), in order for that promise to be binding upon the employee after the employment relationship ends.
While the Supreme Court of Pennsylvania has yet to weigh in on this issue, an employer doing business in Pennsylvania would be prudent to provide additional consideration when asking for a current employee to sign a non-compete agreement.
As for employers with non-compete agreements which do not currently meet the requirements set forth by the Superior Court in Socko, steps should be taken promptly to implement new, valid agreements.