Pennsylvania Non-Compete Agreements

A Pennsylvania non-compete is enforceable when it is (1) ancillary to employment, (2) supported by adequate consideration, and (3) reasonable in duration, geographic scope, and the activity restricted — and no broader than needed to protect a legitimate business interest. Courts may "blue-pencil" an overbroad covenant.

In Socko v. Mid-Atlantic Systems, 126 A.3d 1266 (Pa. 2015), the Pennsylvania Supreme Court held that continued employment is not sufficient consideration for a non-compete signed after hire — the employee needs something new of value (a raise, bonus, promotion, etc.). The Uniform Written Obligations Act does not cure a lack of consideration. Get the covenant signed at hire, or pair a later one with real consideration.

The Fair Contracting for Health Care Practitioners Act (Act 74 of 2024, effective Jan 1, 2025) makes a non-compete entered into after that date with a covered practitioner void unless it runs no more than one year and the practitioner was not dismissed by the employer — even a covenant of a year or less is unenforceable if you dismissed the practitioner. The covered list is closed (medical doctors, doctors of osteopathy, certified registered nurse anesthetists, certified registered nurse practitioners, physician assistants — not nurses generally, dentists, pharmacists or therapists), and the Act adds patient-notice duties. Section 4(c) softens the ban: a contract provision letting you recover reasonable relocation, training and patient-base expenses directly attributable to the practitioner and accrued in the three years before separation (amortized over up to five years — not if you dismissed the practitioner) remains enforceable, and a covenant with a practitioner who holds an ownership interest in the business survives a sale, change of control or grant of an ownership interest, though a preexisting covenant can still be voided where the practitioner was not a party to the transaction. Treat health-care covenants separately.

Tie the restriction to a protectable interest (confidential information, customer relationships, goodwill), keep duration/geography narrow, and document the consideration. Overbroad covenants invite litigation even where the concept is allowed.