Epstein Becker: Pennsylvania Supreme Court Holds Mere Continued Employment Is Not Sufficient Consideration for Restrictive Covenant | Practical Law

Epstein Becker: Pennsylvania Supreme Court Holds Mere Continued Employment Is Not Sufficient Consideration for Restrictive Covenant | Practical Law

This Law Firm Publication by Epstein Becker & Green, P.C. discusses a recent decision by the Pennsylvania Supreme Court holding that continued employment by itself is not sufficient consideration for a restrictive covenant. In Socko v. Mid-Atlantic Systems of CPA, Inc., the Pennsylvania Supreme Court found that when an employee has already commenced employment, an employer seeking to bind that employee to a restrictive covenant must provide the employee with a benefit or a positive change in employment status, such as a promotion, a bonus, or a favorable change to the employee's compensation package. The Pennsylvania Supreme Court decision continues a split among states on this issue. Given that applicable state law controls on this issue, employers should be aware of the law in all states where they have employees with restrictive covenants.

Epstein Becker: Pennsylvania Supreme Court Holds Mere Continued Employment Is Not Sufficient Consideration for Restrictive Covenant

by Epstein Becker & Green, P.C.
Published on 19 Nov 2015Pennsylvania, United States
This Law Firm Publication by Epstein Becker & Green, P.C. discusses a recent decision by the Pennsylvania Supreme Court holding that continued employment by itself is not sufficient consideration for a restrictive covenant. In Socko v. Mid-Atlantic Systems of CPA, Inc., the Pennsylvania Supreme Court found that when an employee has already commenced employment, an employer seeking to bind that employee to a restrictive covenant must provide the employee with a benefit or a positive change in employment status, such as a promotion, a bonus, or a favorable change to the employee's compensation package. The Pennsylvania Supreme Court decision continues a split among states on this issue. Given that applicable state law controls on this issue, employers should be aware of the law in all states where they have employees with restrictive covenants.