Noncompete agreements can feel like a double-edged sword. They aim to protect a company’s interests but can seem unfair to employees seeking new opportunities. Pennsylvania law attempts to strike a balance with its unique “blue pencil” doctrine.
What is the “Blue Pencil” doctrine?
In Pennsylvania, courts know that noncompete agreements can sometimes be too strict. Instead of rejecting the whole agreement, courts can use the “blue pencil” rule to change or fix unfair terms, which means that a court can adjust parts of the agreement to make it fair under Pennsylvania law.
For example, let us say an employer drafts a noncompete agreement that prohibits an employee from working in the same industry for five years after leaving the company. A Pennsylvania court might deem this restriction too broad and strike out the five-year provision, replacing it with a more reasonable time frame, such as one year. The court would then enforce this modified agreement.
What does this mean for employers drafting noncompete agreements?
When drafting noncompete agreements, employers must be aware of the ‘Blue Pencil’ doctrine and its potential impact on their contracts. To avoid having their agreements modified by a court, employers should:
- Ensure their noncompete agreements are reasonable in scope and duration
- Clearly define the restricted activities and geographic areas
- Provide consideration to the employee in exchange for the noncompete agreement
By taking these steps, employers can increase the chances of having their noncompete agreements upheld in court.
Why should I consider professional guidance?
While Pennsylvania’s ‘Blue Pencil’ rule helps employers, they still need to write noncompete agreements that balance the needs of employers and employees. Employers should work with a professional who knows Pennsylvania employment law well. This way, they can make sure their agreements fit their business needs and are more likely to hold up in court. With the right help, employers can protect their business interests and avoid expensive and lengthy legal battles.