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Broad contractor non-compete = restraint of trade? (Pennsylvania) Pennsylvania

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  • Broad contractor non-compete = restraint of trade? (Pennsylvania) Pennsylvania

    I have problems with a very broad non-compete I am being asked to sign. I have been providing marketing and PR services to a Pennsylvania startup as a contract employee for two years without a written contract (small firm, handshake agreement). Now the company is growing fast and wants me to sign a contract that includes a non-compete that prohibits me from working for 12 months anywhere in the United States for any company that:

    "develops, manufactures or markets any products, or develops or performs any services, that are otherwise competitive with or similar to the products or services of the Client, or products or services that the Client has under development or that are the subject of active planning at any time during the term of this Agreement."

    This seems very broad to me, particularly as the Client's product has broad application in marketing and the Client has very diverse plans actively under development and active consideration. As I read this it could preclude me from a lot of potential work from companies that are not direct competitors of this current client.

    Is it reasonable of me to ask for a limitation of the clause to a specific state, shorter time period, and more specific competition definition?

    The contract already has language that precludes me from sharing any secret sauce or stealing clients.

    And how likely is that the courts in Pennsylvania would uphold a broad non-compete as written above?

    Thanks for any insight you can provide.

  • #2
    Generally speaking, the main concept of IC status is that the IC can work for several customers at the same time. Honestly, my gut reaction is that this would not be enforceable, but I am not an attorney. Confidentiality agreements, of course. Noncompete agreements fly in the face of being an independent contractor.

    I recommend you get the advice of local counsel, specializing in contract/employment law.
    Last edited by Pattymd; 10-05-2010, 07:38 AM.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      Agreed. Also, NCAs tends to be VERY state specific. And often very specific to the exact wording of the contract.
      "Reality is that which, when you stop believing in it, doesn't go away".
      Philip K. **** (1928-1982)

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      • #4
        The broader the non-compete, the more likely it will be struck down. But you'll have to have the contract reviewed by an attorney to see if it's enforceable. But it does tend to make you an employee rather than IC.
        I am not an attorney, and don't play one on TV. Any information given is a description only and should be verified by your attorney.

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        • #5
          This is Pennsylvania's take on noncompetes.

          Noncompetes are enforceable if they are incident to an employment relationship between parties, the restrictions are reasonably necessary to protect the employer,
          and the restrictions are reasonably limited in duration and geographic extent.
          There are no specific time or geographical restrictions.

          You need to take the agreement to a local attorney for review as suggested.
          Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

          Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

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          • #6
            Betty3, and I'm guessing the operative phrase there is employment relationship, don't you?
            I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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            • #7
              Patty, I was thinking the same thing when I typed that.
              Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

              Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

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              • #8
                Thanks for all of these thoughtful responses. Very helpful.

                I agree that the idea of an IC is someone that can supply the same type of services to a variety of clients in the same field. Clearly part of being a good and respected IC is keeping trade secrets and maintaining a mental Chinese firewall between some sets of information. If I were to violate client confidentiality then I would deserve to experience severe consequences. But severe consequences simply for performing similar work for a different client?

                Now you guys mention it, this non-compete clause does sound like it came from an employment contract. But I would still have qualms about how broad it is if I were offered such an employment contract without serious inducements to bind my future so tightly with that of my employer).

                And it is hard to imagine that everyone who works there has signed something this restrictive.

                MM

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                • #9
                  Just to be clear, non-disclosure agreements (NDA) are much more likely to be considered legal pretty much anywhere then are non-compete agreements (NCA). Past that, agree with everyone else.
                  "Reality is that which, when you stop believing in it, doesn't go away".
                  Philip K. **** (1928-1982)

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