Is my friend required to pay a hefty buy-out fee due to a Non Compete Clause in his old job’s contract when switching jobs in Pennsylvania? #NonCompeteClause #BuyOutFee #PennsylvaniaLaw #JobChange #LegalAdvice
Details of the situation:
– Old job in Pennsylvania, new job headquartered in a different state (tech job with WFH)
– Roles at old and new jobs slightly different (upgrades vs. implementation of software)
– No known client overlap between jobs
Concerning Non Compete Clause in old job’s contract:
– Restricts engagement in similar business for 2 years post-employment
– Breach could result in 50% annual salary buy-out fee
– Legal department of old job already pursuing collection of buy-out fee
Is my friend in trouble? Any advice or insights appreciated. Thank you! #LegalHelp #JobTransition #NonCompeteLaws #EmploymentContracts
He should consult an attorney, most non compete clauses of this kind are unenforceable depending upon his state law.
Agree with the general sentiment that a lawyer should be consulted here.
A few factors that could weigh in your friends favor: there is no geographical scope to the noncompete which would weigh against enforcement or even claw back of the provision by a court; if your friend was not paid severance in connection with the the termination then it is really difficult to enforce an employees noncompete given the general goal of allowing people to be employed in the job market; courts over the last few years, even without the FTC rules, have been very anti noncompete on employees that are not executives, especially ones that do not receive severance or continued payments after termination.
Definitely check with a lawyer. In Texas we have to include a distance/territory to be valid.
Your friend would be wise to consult with an employment attorney in Pennsylvania.
However, there are serious issues with the language of that noncompete. It does not include a reasonable geographic restriction, it does not include adequate consideration (in other words, your friend needed to be offered something of value in return), and the wording is shoddy.
For example, “you may not engage…” should be written “you shall not engage…” Even if it used “will” instead of “may,” it would render the clause unenforceable in some jurisdictions due to ambiguity.
In my opinion, the company is attempting to shake down your friend. Retaining a lawyer to force the company to go through them instead of contacting your friend directly might be worth the peace of mind.