{"id":11133,"date":"2023-09-27T10:54:40","date_gmt":"2023-09-27T14:54:40","guid":{"rendered":"https:\/\/archive-lynchlaw.pfgsandbox.com\/?p=11133"},"modified":"2023-09-27T10:54:40","modified_gmt":"2023-09-27T14:54:40","slug":"implications-of-no-hire-provisions-for-business-owners","status":"publish","type":"post","link":"https:\/\/archive-lynchlaw.pfgsandbox.com\/?p=11133","title":{"rendered":"Implications of No-Hire Provisions for Business Owners"},"content":{"rendered":"

Implications of No-Hire Provisions for Business Owners<\/h2>\n

How a Pennsylvania Supreme Court Case Could Change Your Hiring Process<\/span><\/span>\u00a0<\/span><\/h3>\n

Questions of the e<\/span>nforceability and <\/span>the i<\/span>mplications of a contractual clause known as a “no-hire provision” were recently <\/span>resolved<\/span> by the Pennsylvania Supreme Court. In <\/span><\/span>PLS Logistics Services (PLS) vs. <\/span>Beemac<\/span> Trucking<\/span><\/span>, the Court had to decide whether two companies could restrict the rights of employees <\/span>between<\/span> one another <\/span>through the <\/span>use<\/span> of<\/span> a <\/span>\u201cno-hire provision<\/span>.\u201d<\/span> These terms restricted one company (<\/span>Beemac<\/span>) from hiring former employees of another company (PLS) without prior approval or compensation.<\/span><\/span><\/p>\n

The Background You Need to Know<\/span><\/span>\u00a0<\/span><\/h4>\n

The case revolved around <\/span>Beemac<\/span> Trucking hiring four former PLS employees<\/span>,<\/span> in violation of their no-hire <\/span>agreement wit<\/span>h P<\/span>L<\/span>S.<\/span> PLS argued that no-hire provisions were essential in protecting their investment <\/span>of training employees and preventing the poaching of their staff. <\/span>T<\/span>hese <\/span>clauses<\/span> were between the two corporations themselves, not the employees. <\/span>The Pennsylvania Supreme Court ultimately took this detail into consideration when ruling that<\/span><\/strong><\/span> the specific no-hire provision in question was unenforceable and had the potential to cause harm to the employees involved.<\/span><\/span> As a result, the Court struck down the use of no-hire provisions in contracts between companies doing business together.<\/span><\/span>\u00a0<\/span><\/strong><\/p>\n

Alternative Options<\/span> for Employers<\/span><\/span>\u00a0<\/span><\/h4>\n

If a business <\/span>was<\/span> looking for an enforceable alternative to the recently struck down no-hire provision,<\/span> a<\/span> non-solicitation agreement would b<\/span>e one to<\/span> consider.<\/span> While <\/span>a non-solicitation<\/span> agreement <\/span>is<\/span> not completely identical to <\/span>a<\/span> no-hire clause<\/span>,<\/span> it<\/span> can be used to achieve similar outcomes<\/span> because they are written between employers and their employees.<\/span> A non-solicitation provision typically has two parts. First it restricts a former employee from <\/span>soliciting<\/span> current employees to leave their current employment to join the ranks of another company. Second, it restricts a former employee from <\/span>soliciting<\/span> the customers of his or her former employe<\/span>r to move their business to another provider. It is the former that is more akin to a no-hire clause because it limits the people who are <\/span>permitted<\/span> to approach employees with the intention of <\/span>attempting<\/span> to get them to leave. <\/span>If you seek to use a non-<\/span>solicitation<\/span> provision, keep in mind that it must be <\/span>reasonable in three specific areas<\/span>.<\/span>\u00a0<\/span><\/span>\u00a0<\/span><\/p>\n

The Three Elements of an Enforceable No<\/span>n-Solicitation<\/span> Provision<\/span><\/span>\u00a0<\/span><\/h4>\n

A<\/span> no<\/span>n-solicitation <\/span>provision cannot be a<\/span> general <\/span>statement – it must be limited and precise in three specific <\/span>areas<\/span>: geographic scope, time, and description.<\/span><\/span>\u00a0<\/span><\/p>\n

Geographic <\/span>Scope<\/span><\/span>\u00a0<\/span><\/h5>\n

A geographic <\/span>scope <\/span>restriction is based on the <\/span>footprint<\/span> of your business<\/span>.<\/span> If your business only has a footprint in Southwestern Pennsylvania, you can only reasonably restrict your <\/span>employees’ solicitation<\/span> efforts <\/span>in Southwestern Pennsylvania.<\/span> Often non-solicitation agreements will <\/span>be limited to specific counties, states, or a radius from a business\u2019s headquarters<\/span> to abide by the geographic restriction.<\/span><\/span>\u00a0<\/span><\/p>\n

Time Restriction<\/span><\/span>\u00a0<\/span><\/h5>\n

In addition to a <\/span>non-<\/span>solicitation<\/span> clause being re<\/span>asonabl<\/span>e in geography, it must also be re<\/span>asonable<\/span> in time. <\/span>Simply put, you cannot restrict someone from <\/span>soliciting<\/span> your employees<\/span> forever,<\/span> there has to be a limit<\/span>.<\/span> In<\/span> Pennsylvania, the <\/span>most commonly accepted<\/span> reasonable restriction<\/span> is <\/span>24 months<\/span>, but if it is a highly competitive or specialized job<\/span>,<\/span> then you can extend that <\/span>restriction <\/span>to as long as five years.<\/span><\/span>\u00a0<\/span><\/p>\n

Descriptive Restriction<\/span><\/span>\u00a0<\/span><\/h5>\n

The final <\/span>element<\/span> of a successful and enforceable no<\/span>n<\/span>–<\/span>solicitation <\/span>provision is the descripti<\/span>on<\/span>. As an employer, you must be clear and <\/span>precise about <\/span>who your employees are forbidden from <\/span>soliciting<\/span>.<\/span><\/span><\/span><\/span><\/p>\n

The Impact on Business Owners<\/span><\/span>\u00a0<\/span><\/h4>\n

The <\/span>PLS vs. Beemac Trucking <\/span><\/i>case holds particular relevance for business owners who may want to include restrictions in their contracts between themselves and a customer or vendor to protect their investment of time and money in their staff. While the case made those specific kinds of covenants invalid, non-solicitation agreements between employers and employees can achieve similar results and are widely accepted.<\/span>\u00a0<\/span><\/p>\n

There are other ways to protect business interests that do not involve the use of restrictive covenants. Building strong relationships with employees, providing competitive compensation and benefits, fostering a positive work environment, and offering opportunities for growth and advancement may be just as effective in retaining talent and preventing employee departures through a restrictive covenant.<\/span>\u00a0<\/span><\/p>\n

If a restrictive covenant like a non-solicitation provision is necessary, be sure to abide by the standards of reasonableness in terms of geography, time, and description.<\/span><\/p>\n

Recap<\/span><\/span>\u00a0<\/span><\/h4>\n

Finding the right balance between protecting business interests and complying with current laws dealing with employee rights is crucial for business owners. While non-solicitation provisions can be a tool for safeguarding investments, the recent court ruling emphasizes the importance of avoiding overly restrictive provisions that hinder job opportunities for employees.<\/span><\/p>\n

If you have concerns about the enforceability and potential consequences of the provisions in your customer contracts or non-solicitation clauses in your employee agreements, talk to a lawyer who practices employment law. The Lynch Law Group has an Employment Law Practice Group to assist you with navigating these complex legal matters and ensuring your customer contracts and employment agreements align with current legal standards. Contact Dan Lynch at 724-776-8000 to discuss.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Implications of No-Hire Provisions for Business Owners How a Pennsylvania Supreme Court Case Could Change Your Hiring Process\u00a0 Questions of the enforceability and the implications of a contractual clause known as a “no-hire provision” were recently resolved by the Pennsylvania … →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":8929,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[61,69,78,148],"tags":[483,481,476,477,484,482],"class_list":["post-11133","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-press-releases","category-corporate","category-employer-news","category-litigation","tag-business","tag-no-hire","tag-non-competes","tag-non-compete-clauses","tag-pa-supreme-court","tag-regulations"],"_links":{"self":[{"href":"https:\/\/archive-lynchlaw.pfgsandbox.com\/index.php?rest_route=\/wp\/v2\/posts\/11133","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive-lynchlaw.pfgsandbox.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive-lynchlaw.pfgsandbox.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archive-lynchlaw.pfgsandbox.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/archive-lynchlaw.pfgsandbox.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11133"}],"version-history":[{"count":2,"href":"https:\/\/archive-lynchlaw.pfgsandbox.com\/index.php?rest_route=\/wp\/v2\/posts\/11133\/revisions"}],"predecessor-version":[{"id":11135,"href":"https:\/\/archive-lynchlaw.pfgsandbox.com\/index.php?rest_route=\/wp\/v2\/posts\/11133\/revisions\/11135"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/archive-lynchlaw.pfgsandbox.com\/index.php?rest_route=\/wp\/v2\/media\/8929"}],"wp:attachment":[{"href":"https:\/\/archive-lynchlaw.pfgsandbox.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11133"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive-lynchlaw.pfgsandbox.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11133"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive-lynchlaw.pfgsandbox.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11133"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}