42.2% of Pennsylvania companies make at least some employees sign a non-compete agreement, according to a report by the Economic Policy Institute (EPI). The same report says 31.1% of Pennsylvania companies make all their employees sign one. Does this mean you need your employees to sign one?
Non-compete agreements are currently allowed in Pennsylvania but not without limits. Some states have banned them altogether, and there are attempts to ban them on a national level too. The EPI report suggests they are responsible for wage stagnation and are harmful to the economy.
Previous cases, brought by Pennsylvania employees wanting to escape a non-compete contract, suggest that they need to be fair to be upheld in court. Binding employees’ hands with no discernible advantage to them is not likely to be considered a fair trade. If you want something from your employees, you need to give them something back in return.
If you wish to use a non-compete, you need to consider geographical or time limits too. Telling an employee they can never work in your industry ever again, anywhere in the world, is not reasonable.
Does your company even need to use a non-compete agreement?
The best way to retain your employees is to incentivize them, so they want to stay, rather than resorting to penalizing them if they leave. Besides, do you really want workers who only stay with your company because the agreement they signed does not let them go elsewhere?
If you have company information that you need to protect, there are plenty of legal means to do so that do not involve non-compete agreements. They may be more effective, too.