Practice Area: Employment Law

When an ex-employee works for a competitor, the violation of a non-compete covenant is clear-cut. But few employment contracts define what it means to "solicit."

What is a non-solicitation agreement?

As a restrictive covenant, non-solicitation agreements prevent a departing employee from soliciting the old employer's customers or workforce to do business or work with a new employer. But, these clauses are less burdensome than non-compete agreements that prohibit any work for a competitor or bar any service to a former employer's customers.

Like its stricter cousins, a non-solicitation agreement is a restraint on competition. However, it must not tie the ex-employees hands too tightly. Non-solicitation clauses must include consideration. For example, some benefit to the employee to compensate for the post-employment restriction. And the agreement must be reasonably necessary for the employer's protection and reasonable in time, geographic scope, and scope of the prohibited activities. These are the minimum requirements for an ex-employer who seeks a court injunction against violation of a non-solicitation agreement.

These agreements can be confusing. So, if you are looking for an employment lawyer near you to review these documents, contact us at 610.275.0700.

What does it mean to "solicit" and violate a non-solicitation clause?

When an ex-employee works for a competitor, the violation of a non-compete covenant is clear-cut. But few employment contracts define what it means to "solicit."

As a result, courts have developed workable definitions of "solicit" on a case-by-case basis. In Meyer Chatfield v. Century Business Servicing, Inc., 732 F.Supp.2d 514, 520 (E.D. Pa. 2010), Judge Slomsky used Black's Law Dictionary's definition of "solicit":

To appeal for something; to apply to for obtaining something; to ask earnestly; to ask for the purpose of receiving; to endeavor to obtain by asking or pleading; to entreat, implore, or importune; to make petition to; to plead for; to try to obtain; and though the word implies a serious request, it requires no particular degree of importunity, entreaty, imploration, or supplication. To awake or incite to action by acts or conduct intended to and calculated to incite the act of giving. The term implies personal petition and importunity addressed to a particular individual to do some particular thing.

Under this definition, an ex-employee violates a non-solicitation agreement by contacting or inducing former contacts to bring business to the ex-employee. However, an ex-employee must be proactive in violating the agreement. For example, responding to a former customer who initiates contact with the ex-employee is not "solicitation."

In Harry Blackwood Associates v. Caputo, 434 A.2d 169 (Pa. Super. 1981), the Pennsylvania Superior Court held that a non-solicit clause did not prevent an ex-employee from doing business with a customer who had sought out the ex-employee.

What about other ways to inform the business community of new employment?

For example, is it a solicitation to post-employment announcements or send out business cards where some recipients are former contacts? A statement or mentioning a new employee's name in marketing materials does not constitute a solicitation. However, when targeted only to customers inviting them to move their business may be a solicitation. See PharMerica Corp. v. Sturgeon, 2018 WL 1367339, *8 (W.D. Pa. March 16, 2018)

Does a LinkedIn profile post about new employment violate a non-solicitation agreement?

Courts have held that a simple posting or invitation to connect on LinkedIn is not a solicitation. Bankers Life and Casualty Co. v. American Senior Benefits LLC, 83 N.E.3d 1085 (Ill. App. 2017).

But a posting that morphs into a sales pitch constitutes a solicitation. Mobile Mini, Inc. v. Vevea, 2017 WL 3172712 (D. Minn. 2017). For example, in an unpublished 2017 decision, the Pennsylvania Superior Court enjoined as unlawful solicitation a veterinarian's creation of a Facebook page for a new practice containing postings from former clients and other links about animal and pet care. Joseph v. O'Laughlin, 2017 Pa. Unpub. Lexis 3191, 175 A. 3d 1105 (Pa. Super. August 22, 2017). The moral of these cases is that actions beyond a plain vanilla new employment announcement can cross the line into solicitation.

Courts are less likely to crack down on violations of employee non-solicitation contracts than customer non-solicits. However, an ex-employer should be ready to show a court that the purpose of the solicitation is to "cripple and destroy" competition to stop an ex-employee from soliciting former co-workers. Generally, a court will not prohibit solicitation or recruitment of skilled or gifted employees. Nor will courts punish less aggressive contacts with former co-workers, such as telling former colleagues to look for a job posting.

Documentation is Essential

Like all restrictive covenant cases, non-solicitation disputes involve three key participants- the former employer, the ex-employee, and the new employer. Real-time factual documentation is essential for each player in a non-solicitation case. For instance, ex-employees should record all contacts with former customers and co-workers. The record should include information on:

• Who initiated the communication?
• Steps the ex-employee took in responding to the contact
• When they took those steps
• Whether and how the contact generated new business

A spreadsheet is an excellent way to preserve this information. First, the new employer should monitor the employee's actions. Next, the ex-employer can try to document the loss of business or employees. Finally, customers who don't want to do business with the ex-employee may be willing to provide information on improper conduct. But other customers may want a better deal and freely give business to breakaway employees.

Employers must also resist the temptation to be heavy-handed in dealing with customers and employees. Ex-employers and departing employees must avoid misleading customers or disparaging each other, or litigation for business disparagement or contractual interference may result. And overly adversarial behavior may lead customers to stop doing business with both the ex-employer and the ex-employee. In that case, everybody loses.

If you require an employment attorney near you, contact Thomas D. Rees of High Swartz in Norristown, PA, at 610-275-0700.

On June 3, 2021, the United States Supreme Court issued a long-awaited decision on the scope of the Computer Fraud and Abuse Act (“CFAA”). Van Buren v. United States, _ U.S. __, 141 S. Ct. 1648, 2021 WL 2229206, 2021 U.S. Lexis 2843. The Court held that the CFAA prohibited only the gathering of information from sources to which access was not permitted. The Court held that the CFAA did not cover the gathering of information from databases to which access was authorized, even if the information gathering had an improper purpose.

Congress enacted the CFAA in 1986. The original law provided criminal sanctions for computer hacking. The law created criminal liability for (1) obtaining information from intentional access to a computer without authorization and (2) exceeding authorized access and thereby obtaining information. The law defined “exceeds authorized access” as access to a computer with authorization and using such access to obtain or alter information in the computer. Civil remedies for CFAA violations were enacted in 1994, allowing victims of CFAA violations to recover money damages and obtain equitable relief in federal court.

The CFAA’s civil remedies led to increased use of the federal courts for litigation that had previously been confined to state courts. One such example was employee mobility litigation where the ex-employer and ex-employee resided in the same state (precluding diversity jurisdiction). If an employee accessed client information and then used the information to solicit business for a new employer, the CFAA before Van Buren enabled the ex-employer to claim in federal court that the employee exceeded authorized access to a business computer. The CFAA’s low damage thresholds did very little to limit federal suits. The expansive view of “exceeds authorized access” even allowed state court staples such as family law cases to find their way into federal court. The fact that the CFAA had criminal as well as civil sanctions attached an additional stigma to any parties accused of CFAA violations.

Conflicts arose between various federal circuit courts on what actions exceeded authorized access. Some circuits adopted a more restrictive view of the CFAA, holding that an individual with permitted access to data did not violate the CFAA by using the data for an improper purpose, such as misappropriation of confidential information for a new employer. Other circuits took a less restrictive view that an employee who accessed a computer for the purpose of misusing information violated CFAA by exceeding authorized access.

It was in this context that Van Buren, a criminal CFAA case, reached the Supreme Court. Van Buren, a Georgia police officer, had authority to access vehicle registration data through his patrol car computer. But Van Buren accepted payment from a citizen for turning over registration data about a stripper whom the citizen suspected of being an undercover police officer. After Van Buren and the citizen completed the transaction, the FBI arrested Van Buren in a sting operation. The United States charged Van Buren with violating the CFAA for “exceeding authorized access” to a computer by using the computer for personal use. A District Court jury convicted Van Buren, and the Eleventh Circuit upheld the conviction. The Supreme Court accepted review of the case, given the conflict between four federal circuits that upheld the more restrictive view of the law and four circuits that adopted the broader view of the law. (The Third Circuit had not taken a stand either way but District Court decisions within the circuit were conflicting.)

The Supreme Court, in a 6-3 decision that split the Court’s conservative justices, supported the less expansive view of the CFAA. New Justice Barrett wrote the majority opinion in a tightly reasoned analysis of the statute’s wording. Barrett noted that the parties agreed that Van Buren accessed the computer with authorization when he logged into the law enforcement automobile license database. The parties also agreed that Van Buren obtained information from the computer. The narrow question was whether Van Buren was entitled to obtain the information. Van Buren argued that the CFAA allowed him to obtain the information if he was allowed access to the computer. The prosecution argued that since the officer intended to use the information for personal purposes, authorized access was exceeded and the law was violated. Justice Barrett rejected the broader view. She stated that the broader CFAA interpretation would criminalize a “breathtaking amount of commonplace computer activity”, such as sending a personal email or reading the news on an office computer. Therefore, the term “exceeds authorized access” meant to enter a database that was off limits to the user.

The Supreme Court’s narrow interpretation of the law will have effects in the workplace and the court system. Employers may decide cut back on authorized access to computer data. If fewer employees have authorized access, the CFAA may gain back some teeth. The Van Buren decision will leave parties to state disputes with one less access point to federal court. This effect may be mitigated in the employee mobility area where trade secrets are at issue, given the Federal Defend Trade Secrets Act. And for Supreme Court watchers, the decision provides insight into a possible split between Justices who will rely on the plain meaning of a statute and those who will look beyond the meaning to the purpose of the acts covered by the law. Time will tell.

In 2018, I blogged about the Pennsylvania Superior Court decision in Pittsburgh Logistics Services v. Beemac Trucking, LLC, invalidating a no-hire contract between two transportation firms. Earlier this year, the Pennsylvania Supreme Court affirmed the Superior Court. See Pittsburgh Logistics Systems, Inc. v. Beemac Trucking, LLC, _ A.3d , 2021 WL __, 2021 Pa. Lexis 1853 (April 29, 2021). The Court held that the no-hire contracts were an unreasonable restraint of trade in violation of public policy.

The Supreme Court’s decision continues the Pennsylvania appellate courts’ movement to limit employers’ restrictions on ex-employees’ ability to work. As the Pennsylvania Supreme Court held in Hess v. Gebhard & Co., 808 A.2d 912 (Pa. 2002), a restrictive employment covenant may not be used to prevent competition or to keep employees from earning a living. In 1995, the Superior Court refused to enforce a noncompete against an employee who was fired through no fault of his own (Insulation Corp. of America v. Brobston, 667 A.2d 729, 733 (Pa. Super. 1995)). Hess v. Gebhard followed in 2002, refusing to allow a purchaser of a business’ assets to enforce a noncompete where the asset seller did not assign the noncompete to the buyer. Socko v. Mid-Atlantic Systems of CPA, Inc., 126 A.3d 1266 (Pa. 2015), refused to enforce a noncompete when the employer offered the employee no consideration for the noncompete other than continued at-will employment.

In the Pittsburgh Logistics case, Pittsburgh Logistics engaged in the business of arranging for the shipping of goods. Beemac was a transporter of goods. The companies entered into a motor carriage contract in which Beemac would transport goods of shippers arranged by Pittsburgh Logistics. The contract provided that Beemac would not solicit or hire Pittsburgh Logistics’ employees during the contract term and for 2 years after the contract ended. Beemac hired four of Pittsburgh’s employees while the motor carriage contract was still in effect. Pittsburgh sued both Beemac and the departing Beemac employees. The trial court found that the non-hire contracts were void as against public policy. The Superior Court upheld the trial court, first in a panel decision and then in a decision of the court en banc.

The state Supreme Court accepted review to address the question of whether contractual no-hire provisions in a service contract between sophisticated business entities were enforceable under Pennsylvania law. The Court analyzed the law of other states since Pennsylvania had not addressed this issue. The Court found a division between the various states, but held that the trend in other states and at the federal level ran against enforcement of the agreement. The Court noted the Department of Justice’s interest in a case challenging no-poach agreements in the railway industry in the Western District of Pennsylvania (In re Railway Industry Employee No-Poach Antitrust Litigation, 395 F.Supp.3d 464 (W.D. Pa. 2019)). Farther afield, the Court referred to the class action challenge to no-poach agreements between the Duke University and University of North Carolina Medical Schools. See Seaman v. Duke University, 2019 WL 4674758, 2019 U.S. Dist. Lexis 163811 (M.D. N.C. Sept. 25, 2019) (approving class action settlement). Also important, but not noted by the Court, are the recent federal criminal indictments of businesses for wage fixing and no-poach agreements.

In rejecting the no-hire agreement, the Supreme Court employed the traditional reasonableness analysis for restrictive covenants. The Court found that the agreement was ancillary to a shipping contract and Pittsburgh Logistics had a legitimate interest in preventing poaching of employees. But the Court concluded that the no-hire clause was more than what PLS needed to protect this interest. The no-hire provision prevented Beemac from hiring any PLS employee, even those who had not worked with Beemac. The no-hire clause also created a harm to the public. The clause created potential harm to third parties by cutting off possible employment to PLS employees who were not parties to the contract. The restrictions deprived employees of the ability to earn their livelihoods and undermined free competition in the labor market. Finally, restrictive contracts of this sort contributed to slow wage growth and rising wage inequality. The Court noted that wages are 4-5% higher in states that do not enforce worker non-compete agreements.

Pittsburgh Logistics was a narrow ruling on a harsh restriction. The future will tell whether the state’s highest court’s public policy concerns will open the door to further erosion of post-employment restrictions in Pennsylvania.

For business owners, minimizing the risk of civil liability is one of the most effective ways to avoid impacting your profitability by unnecessary lawsuits. A sexual harassment lawsuit by an employee can result in a substantial award paid by the employer.

In 2019, Employers paid out a record $68.2 million through the Equal Employment Opportunity Commission (EEOC) to employees.[1] Even in cases that settle before trial, the average cost to an organization for a harassment claim can be between $75,000 - $125,000.[2]

As an employer, reducing the likelihood of such lawsuits requires taking proactive steps to ensure that you do not run afoul of state and local law. It can also make sense to speak with an employment attorney conversant in those laws.
But what exactly are the duties of an employer with regards to preventing sexual harassment claims from arising? Below are three of the most common ways to reduce this potential liability and add an extra layer of protection to your business's bottom line.

Reducing Your Exposure to Sexual Harassment Litigation

It is essential first to understand the various laws subject to a business owner.

At the federal level, under Title VII of the Civil Rights Act of 1964 (commonly referred to as "Title VII," employers have a responsibility to maintain a workplace free of sexual harassment and to "take all necessary steps to prevent sexual harassment from occurring." [3] To help accomplish this, the EEOC has issued regulations and guidance on the definition of sexual harassment and the employer's responsibilities. Courts use these guidelines to decide whether to hold an employer liable in a sexual harassment case (29 C.F.R. § 1604.11(e).

According to state law, each state has a similar commission or guidance; in Pennsylvania, for example, the Pennsylvania Human Relations Commission, according to state law, issues guidance and provides another way for employees to bring claims against an employer (43 P.S. § 955.)

1. Address sexual harassment before or at the start of employment.

Sexual harassment claims by employees often revolve around the conduct of a co-worker rather than the actions of a manager or a third party. At the same time, this varies by industry.

Educating your employees at their pre-employment orientation or the first day of work is key to protecting against later liability.[4] However, liability for sexual harassment turns on whether an employer permits an intimidating, hostile, or offensive work environment to exist. Employers, therefore, have a duty to proactively prevent sexual harassment, including expressing strong disapproval to employees, developing a procedure for handling complaints (and informing new employees of the existence of these procedures), and educating employees about their rights under state and federal law.

Under U.S. Supreme Court precedent, employers who take reasonable steps to prevent and correct sexual harassment have a strong defense should a claim ever arise.[5] Equally important is ensuring that these preventative measures and the availability of corrective actions are open and available to employees at all times.

While there is no definitive list of pre-employment practices to follow, at a minimum, having a stated anti-harassment policy would establish that the employer attempted to prevent harassment before it began. The more thorough your orientation training and educational practices are, the less likely you will face liability down the road.

2. Develop a system or procedure for handling complaints and follow it.

As mentioned above, informing employees of how you will handle sexual harassment complaints is an essential component of preventing such harassment before it can occur.

Nonetheless, employers who fail to follow a set practice for addressing complaints or who do not take such complaints seriously when made open the door wide open for a later lawsuit. Time and again, failure by business management to take swift action when an employee complains of sexual harassment invites more of the same conduct.

From a legal standpoint, when an employer fails to take corrective action, it opens the door to a sexual harassment suit. That failure can lead to substantial fines and costly settlements. When a procedure is put in place to address instances of sexual harassment, following through on those policies is an excellent way to reduce liability. An employment lawyer can help draft those policies to make sure you avoid potential issues.

3. Avoid retaliatory actions.

While it may seem common sense, employers unknowingly expose themselves to lawsuits and administrative sanctions when they take disciplinary action against the employee complaining of the harassing behavior. A surprisingly high number of complainants, perhaps as high as 75%, face some form of retaliation from their employers after reporting the harassment.[6]

While it may be tempting to transfer, demote, or otherwise discipline an employee who is causing disruptions at your business, employers need to think carefully before taking such action if they have voiced complaints about sexual harassment. While the discipline might seem unrelated to you, an arbitrator, judge, or jury may think differently.
To avoid litigation (which may be costly even if you win), be sure to work with your Human Resources department or employment lawyer before taking any action against an employee in this situation.

Implementing solid policies and a workplace culture that disapproves of sexual harassment is the best way to prevent unwanted conduct from becoming a costly problem.

Talk with an Employment Lawyer Near You

Implementing solid policies and a workplace culture that disapproves of sexual harassment is the best way to prevent unwanted conduct from becoming a costly problem. In addition, consulting with an employment lawyer near you experienced in employment discrimination can give you the best course of action for keeping your business running smoothly. Our law firm has offices in Montgomery and Bucks County. We can help create effective policies and deliver appropriate guidance for sexual harassment in the workplace claims.

[1] https://www.eeoc.gov/statistics/charges-alleging-sex-based-harassment-charges-filed-eeoc-fy-2010-fy-2020
[2] https://www.yourerc.com/blog/post/the-cost-of-sexual-harassment-in-the-workplace
[3] Phila. Hous. Auth. v. Am. Fed'n. of State, Cty. & Mun. Emples., Dist. Council 33, Local 934, 956 A.2d 477, 483 (Pa. Cmwlth. 2008).
[4] The sources of sexual harassment vary based on the work environment; for example, roughly 90% of women in the restaurant/foodservice industry reported some form of sexual harassment in a 2018 study by Harvard Business Review. https://hbr.org/2018/01/sexual-harassment-is-pervasive-in-the-restaurant-industry-heres-what-needs-to-change.
[5] Faragher v. City of Boca Raton, 524 U.S. 775, 806 (1998); Burlington Indus. v. Ellerth, 524 U.S. 742, 766 (1998)
[6] See https://pubmed.ncbi.nlm.nih.gov/14570522/

“If you can’t say anything nice, don’t say anything at all,” our parents told us. Two recent Pennsylvania employment termination cases give this same advice to adult social media users. In both cases, courts upheld terminations for employees’ mean-spirited off-duty social media comments.

In Carr v. Commonwealth, 230 A.3d 1075 (Pa. 2020), a PennDOT employee (Carr) encountered a poorly driven school bus while driving to work. She posted to a Facebook group, “School bus drivers don’t give a flying s**t about those babies” and said she would “gladly crash into a school bus”. She added, “You’re (sic) kids are your problem. Not mine.” Carr disclosed that she worked for PennDOT. Facebook users sent Carr’s post to PennDOT, which terminated her for misconduct.

Carr filed a civil service appeal , claiming First Amendment free speech rights. PennDOT argued that Carr’s off-duty conduct undermined PennDOT’s traffic safety goals and harmed PennDOT’s reputation. The Civil Service Commission upheld PennDOT’s action.

Surprisingly, the Pennsylvania Commonwealth Court overturned Carr’s dismissal. Commonwealth Court viewed Carr’s comments as protected speech about a matter of public concern, despite the reprehensible tone.

The Pennsylvania Supreme Court reversed Commonwealth Court and upheld Carr’s dismissal. The Court held that Carr’s Facebook rant interfered with PennDOT’s highway safety mission. PennDOT therefore had reasonable concerns about adverse effects on PennDOT’s ability to carry out its duties. Commonwealth Court therefore was wrong to hold that Carr’s interest in commenting on bus safety outweighed PennDOT’s broader public safety interest. In short, Carr’s personal rant had limited public importance but caused significant detriment to PennDOT.

Justice Wecht concurred, stating that Carr’s comments raised no public concern at all. He also discussed social media platforms’ potential to disrupt agency operations, suggesting that public employees consider possible employment consequences before making off-hours social media comments.

Ellis v. Bank of NY Mellon Corp., 2020 WL 2557902 (W.D. Pa. May 20, 2020), affirmed, 2021 WL 829620 (3rd Cir. March 4, 2021) (not precedential) also mentioned vehicular violence in a Facebook post. Ellis was a white at-will employee in BNY Mellon’s Pittsburgh wealth management department. During an East Pittsburgh street protest after police killed an African-American teenager, a local councilman drove a car through the crowd. Ellis commented on her public Facebook page, “He should have taken a bus to plow thru.” Her Facebook account disclosed that she was a Mellon employee.

Public reaction was immediate. The public “inundated her employer with complaints” on Facebook and the Bank’s ethics hotline, and to the CEO and Human Resource Chief. They demanded to know if the post reflected Mellon’s values.

After an emergency investigation, Mellon terminated Ellis immediately. Mellon decided that Ellis had violated Mellon’s Social Media Policy prohibiting employees from conduct harming the Bank’s reputation. This Policy warned that violations could lead to termination. The Bank told Ellis that her post was offensive, showed poor judgment and disrespect for others, and encouraged violence.

As an at-will private sector employee, Ellis lacked First Amendment protection for off-duty comments. However, Ellis filed a race discrimination claim. She complained of harsher treatment than African-American employees who posted Facebook comments on the same incident or police brutality. BNY Mellon moved for summary judgment, contending that Ellis failed to make out a prima facie case because the African-American comparators were not similarly situated to Ellis. The comparators worked in different positions with different responsibilities and supervisors. The court granted summary judgment to Mellon. The court contrasted Ellis’ posting from the comparators’ postings, holding that Ellis addressed current news and supported driving through a crowd. The Court held that the Bank had legitimate, non-discriminatory grounds to fire Ellis for a posting that “was offensive in nature, advocated violence, demonstrated extremely poor judgment, and created a reputational risk” to the Bank. In a very brief opinion, the Third Circuit recently affirmed the District Court.

Our parents’ warning was right. And before posting on social media, employees should also remember the warning given law enforcement, albeit in a different context: “You have the right to remain silent; anything you say may be used against you.”