January 19, 2015
In my June 16, 2014 blog, I reported on the Pennsylvania Superior Court’s decision upholding the requirement of consideration for a non-competition agreement with a current employee. Socko v. Mid-Atlantic Systems of CPA, Inc., 99 A.3d 928 (Pa. Super. 2014). The Pennsylvania Supreme Court has now granted the former employer’s request to review the Superior Court’s decision. Socko v. Mid-Atlantic Systems of CPA, Inc. 2014 WL 6991669 (Pa. Dec. 11, 2014). The issue before the Supreme Court is whether the Pennsylvania Uniform Written Obligations Act, 33 P.S. § 6 (“UWOA”) eliminates a current employee’s ability to require consideration for a non-compete agreement that states that the parties intend “to be legally bound”. The former employer, who is appealing, says that consideration is unnecessary in these circumstances. The ex-employee asserts that consideration is required. The parties agree that the employer did not give consideration for the non-compete. The ex-employee brought the suit by seeking a judgment that the non-compete was unenforceable. The ex-employee won summary judgment without a trial in the Court of Common Pleas, and the Superior Court upheld this decision.
The Supreme Court rarely grants petitions for review. In the majority of recent non-compete cases where the Supreme Court has decided to review the Superior Court, the Supreme Court has overturned the Superior Court.
If the Supreme Court reverses the Superior Court, greater enforcement of post-employment non-competes may take place in Pennsylvania. This trend would run counter to trends in states such as California and Massachusetts. California prohibits non-competes by statute, but the state’s courts protect trade secrets vigorously. Massachusetts is now considering legislation to prohibit non-competes and (finally) considering enactment of the Uniform Trade Secrets Act. California attributes its vibrant high-tech economy partly to the fact that trade secret protection has primacy over non-compete enforcement.
So it is worth staying tuned on Socko. All commercial and employment lawyers will want to follow this case through briefing and argument. They may also want to ask themselves how “Uniform” the UWOA really is when Pennsylvania is the only state where the act is in effect.
The information above is general; we recommend that you consult with an attorney regarding your specific circumstances. The content contained herein is not meant to be considered as legal advice or as a substitute for legal representation.