You’ve Already Signed Your Offer Letter– Can You Still Be Subject to a Non-Compete Agreement Signed at the Inception of Employment Without New Consideration? Pennsylvania Supreme Court Says Yes

Is new consideration required for a valid covenant not to compete presented to an employee at the inception of their employment after they sign their offer letter? 

Under the majority approach, recognized in many states continued employment is sufficient consideration for a valid non-compete agreement.  However, a minority of jurisdictions, will not enforce a non-compete agreement offered for signature after the employee has already begun work unless it is supported by new consideration.  In those jurisdictions, continued employment is typically not considered sufficient consideration and they instead require that any non-compete be supported by new consideration such as a promotion, stock options or some other tangible benefit. The minority rule can prove problematic in situations where there are multiple employment documents which may be construed as a non-compete agreement and, therefore, the commencement of employment date and the date of execution of employment agreements are often essential. The Pennsylvania Supreme Court recently addressed the issue of whether a covenant not to compete is enforceable when offered after the employee has already accepted an offer letter and employment has commenced in the case of Pulse Technologies, Inc. v. Notaro.          

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