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Can You File a Lawsuit Against an Employee for Starting a Competing Business in Pennsylvania?

Pennsylvania does not have a specific statute regarding “customer poaching,” but there are ways you can protect your business from an employee who uses protected information to establish a competing business.

In Erie County, a local barn-door hardware company filed a five-count complaint against its former office manager. The hardware company alleged that the ex-employee had unfairly competed with its business and ultimately “completely usurped” his employer’s costumer base even as he continued to work for the company.

Usually, when you hire someone to work for your business in Pennsylvania, the employee is obligated to refrain from divulging any of your trade secrets. Customer lists and client details qualify as trade secrets and confidential information. An employee may not use their employer’s confidential information outside of the scope of their job responsibilities.

The Erie County case is a rare instance where the alleged misconduct involved a then-current employee. There, plaintiff alleged that the defendant added links to the company’s social media pages that steered online visitors to his own company.

Pennsylvania courts will generally uphold the terms of employment agreements under rulings established by traditional contract law. Employers can therefore take a proactive approach and protect themselves from customer poaching by requesting that new hires sign a Non-Competition Agreement or a Non-Solicitation Agreement. Although these agreements can be enforced by the courts under contract law, specific requirements must be met in order to help guarantee compliance. One consideration might be the employee’s classification as either an independent contractor or a full-time hire. An employer may also be required to prove that their employee was hired and trained by them to do a particular job, mastering certain skills that enabled the employee to become a competitor.

Before hiring people who will have access to your customer information, trade secrets, or other confidential data, you should first consult with a qualified and experienced attorney. At Feldstein Grinberg Lang & McKee, P.C., we build long-term positive relationships through our dedication to protecting our clients’ business interests. Call 412-301-7395 or contact us online to arrange your confidential consultation and learn how we can help you.

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