Pennsylvania – Trade Secrets & Non-Compete Law

July 26, 2024 by Duane Morris

Pennsylvania Fair Contracting for Health Care Practitioners Act Limits Post-Employment Noncompetes

On July 17, 2024, Pennsylvania Governor Josh Shapiro signed into law the Fair Contracting for Health Care Practitioners Act. The Act, which will go into effect on January 1, 2025, will limit the use of noncompete covenants for healthcare practitioners in the commonwealth and require employers to provide notice to patients of a healthcare practitioner’s departure.

According to the Pennsylvania Legislature, the Act is intended to limit what it views as the negative impacts of noncompetition provisions in the employment of covered healthcare practitioners and improve the attraction and retention of those healthcare practitioners in Pennsylvania.

Read the full Alert on the Duane Morris LLP website.

July 24, 2024July 26, 2024 by Duane Morris

Pennsylvania Federal Court Denies Injunction to Halt FTC’s Ban on Noncompetes

As reported in our prior Alert, on April 23, 2024, the Federal Trade Commission (FTC) voted 3-2 to approve a final rule:

Banning noncompete agreements with virtually all workers 120 days after publication in the Federal Register (i.e., on September 4, 2024);
Invalidating existing noncompetes with all workers except senior executives; and
Requiring employers to send a clear and conspicuous notice to affected workers, by the effective date, that the worker’s noncompete clause will not be, and cannot legally be, enforced.

At least three challenges to the noncompete ban have been filed in federal courts since that time, but none have yet succeeded in halting the ban nationwide. As reported in our recent Alert, on July 3, 2024, in the Ryan lawsuit, the U.S. District Court for the Northern District of Texas enjoined the FTC from enforcing its noncompete ban and stayed the ban as to the parties to that lawsuit, but refused to issue a nationwide injunction or stay that would apply to other employers. On the heels of the decision in Ryan, on July 23, 2024, the U.S. District Court for the Eastern District of Pennsylvania, in ATS Tree Services, LLC v. Federal Trade Commission, et al., denied the plaintiff’s motion seeking a nationwide injunction and stay, dealing a further blow to efforts to halt the noncompete ban.

Read the full Alert on the Duane Morris LLP website.

May 3, 2021June 22, 2023 by Duane Morris

Pennsylvania’s High Court Finds Businesses’ No-Hire Provision “Unreasonably in Restraint of Trade and Therefore Unenforceable”

In its April 29, 2021, opinion, Pittsburgh Logistics Systems v. Beemac Trucking,―A.3d―, No. 31 WAP 2019, 2021 WL 1676399 (Pa. Apr. 29, 2021), the Supreme Court of Pennsylvania weighed in on whether no-hire, or “no-poach,” provisions that are ancillary to a services contract between business entities are enforceable under Pennsylvania law. The court declined to hold such provisions per se unenforceable. Its answer for the clause at issue, however, was a resounding “no.” Now, more than ever, it is critical for Pennsylvania companies and employers to consult with legal counsel to evaluate any no-poach provisions in commercial and employment agreements to increase the chances that these provisions will be upheld.

Read the full Alert on the Duane Morris LLP website.

February 21, 2019 by Duane Morris

Pa. Superior Court Holds “No-Hire” Provision in Commercial Contract Between Two Businesses Unenforceable

On January 11, 2019, the Pennsylvania Superior Court, sitting en banc, affirmed a trial court decision that a “no-hire” provision in a commercial contract between two companies—i.e., an agreement by which one company agrees not to solicit or hire the employees of the other for a certain period of time—violated public policy, and was thus unenforceable under Pennsylvania law. Pittsburgh Logistics Systems, Inc. v. Beemac Trucking, LLC and Beemac Logistics, LLC, No. 134 WDA 2017, 2019 Pa. Super. 13 (Jan. 11, 2019).

In Pittsburgh Logistics, Pittsburgh Logistics Systems (PLS), a third-party logistics provider, entered into an agreement with one of its customers, BeeMac Trucking and BeeMac Logistics, for PLS to provide logistics services to BeeMac. The agreement included a no-hire provision prohibiting BeeMac from directly or indirectly hiring, soliciting for employment, inducing or attempting to induce any employee of PLS or any of its affiliates to leave their employment with PLS or the affiliate during the term of the agreement and for a period of two years thereafter. After four PLS employees joined BeeMac, PLS sued BeeMac and its former employees seeking an injunction to enforce, among other things, the no-hire provision. The trial court, noting that a provision such as the one between PLS and BeeMac has never been the subject of litigation in Pennsylvania in any reported case, refused to enforce the no-hire provision, citing cases in other jurisdictions where similar provisions were held to be unenforceable. PLS appealed the trial court’s denial of its preliminary injunction motion seeking to enforce the no-hire provision.

Read the full Duane Morris Alert.