While some federal courts have been making it easier for employers to use more expansive non-compete agreements to shackle their workers, some states are working to make it more difficult. California already has a blanket ban on non-compete agreements, including those signed in states where they are legal. Now Pennsylvania might be the next state to join California’s worker-friendly approach.
Pennsylvania’s legislators recently introduced a new house bill, titled the “Freedom to Work Act,” which would ban almost all non-compete agreements.
The proposed law, as it is currently written, is not quite as restrictive as California’s ban. Pennsylvania’s proposed Act defines a non-compete agreement as any agreement between an employer and their worker that is designed to prevent the worker from seeking employment with another company, although the Act would enforce non-compete agreements in certain situations, including the sale of a business or the dissolution of a partnership or LLC. The Act also would not apply to non-compete agreements in existence prior to the time the Act is made into law, although it would prohibit the renewal of any such agreements.
The proposed Act would also provide an incentive for workers to sue employers who try to enforce illegal non-compete agreements. If an employee sues a company under the proposed Act and wins, the law states that they shall be awarded attorneys’ fees, in addition to damages (including punitive damages). The wording of the Act implies these awards would be automatically granted to any employee who wins such a dispute in court, instead of merely being an option they can choose to include in their claims.
Speaking of court, the Act also has wording to make sure any disputes over non-compete agreements are handled in Pennsylvania state courts, rather than the federal court system, which is sometimes more favorable to Big Business. Given the option, most people will file a motion to have their case moved to federal court if they think their side of the story would have a better reception there. Many companies have done this with class action lawsuits by moving large class actions to federal court, where the case of the company is often better received.
This is known as forum shopping, and Pennsylvania’s proposed Act would not allow anyone involved in a legal dispute over non-compete agreements to move their case to federal court. Instead, the Act specifically states that any such lawsuits must be handled in a Pennsylvania court to be ruled by Pennsylvania law. This is especially important given the fact that most disputes over non-compete agreements are liable to be class action lawsuits (which can be moved to federal court if they’re large enough). Companies that require one or two employees to sign non-compete agreements have become more and more likely to require most, if not all, of their employees to sign such agreements.
Pennsylvania employers and workers alike will both want to review their employment contracts. This could be employers’ last chance to create or renew such contracts before the law goes into effect. If the Act does pass, workers will want to make sure their employers aren’t trying to hold them to unenforceable contracts.
Our Chicago non-compete agreement attorneys have defended high-level executives in a covenant not to compete and trade secret lawsuits. A case in which our firm defended a former Motorola executive was covered in Crain’s Chicago Business. You can view that article by clicking here.
Lubin Austermuehle a firm of Chicago business dispute lawyers handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat. Our Chicago business lawyers with offices near Highland Park and Deerfield have substantial experience in restrictive covenant and breach of contract cases, and we are proud of our record of strong results. We have successfully represented a number of doctors in non-compete, partnership, and other business disputes. We understand the complexities of physician partnership and non-compete agreements.
Lubin Austermuehle a Chicago business litigation law firm represents both plaintiffs and defendants in such cases, and can also help stop litigation before it starts by reviewing contracts to look for covenants and clauses that could create problems later. Our firm has also handled many shareholders and LLC disputes between owners of closely held corporations, and LLCs.
Based in Oakbrook Terrace and downtown Chicago, our Wheaton and Geneva non-compete agreement and business dispute lawyers take cases from Winnetka and Glencoe and many other cities throughout Illinois, as well as in Indiana, Wisconsin and the entire United States. To learn more or set up a free consultation, please contact one of our Chicago business dispute lawyers through the Internet or call toll-free at (833) 306-4933 today.
Lubin Austermuehle’s Naperville and Schaumburg non-compete agreement litigation attorneys have more than three decades of experience helping clients unravel the complexities of Illinois and out-of-state non-compete and trade secret theft laws. Our Chicago business dispute attorneys also represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners, shareholders, and LLC members as well as lawsuits between businesses and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Oak Brook, near Mt. Prospect and Deerfield, we serve clients throughout Illinois and the Midwest.