Court Opinion

ID: 9763200
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:38:38.39268+00
Date Added: 2024-06-11T07:29:39.998146
License: Public Domain

DEL SOLE, Judge,
dissenting.
The majority reaches the conclusion that the employment agreement is not enforceable because Appellant was terminated and, therefore, his value to Appellee was worthless. Accordingly, the majority holds that an employer needs no protection against a worthless employee. However, that is not the proper focus. It is the discharged employee’s knowledge of the business which is being restricted.
As the majority points out, Appellant, while he may not have been able to actually operate the CAD system, “admittedly possessed confidential customer sales and profit margin information that related to the system”. Possessing that kind of knowledge can certainly create an unfair advantage in the marketplace.
Appellant worked for Appellee for ten years and during the greater part of his career, Appellant was a successful salesperson and ultimately achieved the position of Vice President of special products. Even though Appellant clearly had a signifi*539cant amount of experience with Appellee’s products and pricing, the majority writes:
“[o]nce such a determination [to terminate an employee] is made by the employer, the need to protect itself from the former employee is diminished by the fact that the employee’s worth to the corporation is presumably insignificant. It bears noting that there is a significant factual distinction between the hardship imposed by the enforcement of a restrictive covenant on an employee who voluntarily leaves his employer and that imposed upon an employee who is terminated for failing to do his job. The salesman discharged for poor sales performance cannot reasonably be perceived to pose the same competitive threat to his employer’s business interests as the salesman whose performance is not questioned, but who voluntarily resigns to join another business in direct competition with the employer.”
This line of reasoning does not take into account the fact that an employee necessarily acquires a certain amount of knowledge about an employer’s business over a period of time. Furthermore, the majority’s statement that “the record amply demonstrates that he has not acquired any special expertise in CAD system-produced insulation products, nor has he demonstrated to his employer that his sales skills are a competitive force warranting protection through a “non-competition covenant” is erroneous. It is overreaching to state that because Appellee terminated Appellant based upon poor performance, Appellee did not need any protection. Appellant’s poor performance was of a recent nature and it is nonsensical to conclude that Appellee could assume that based upon his recent performance, Appellant would be equally unproductive elsewhere. This conclusion ignores the many factors that can play a role in an employee’s productivity.
Furthermore, In Footnote # 8 the majority seeks to interject into the employer-employee restrictive covenant law of this Commonwealth something that is not now nor ever has been a criteria for enforcement of a restrictive covenant— namely the reason for the termination of an employee.
*540The majority suggests that where an employee has been terminated by the employer, under no circumstances can an employer seek to enforce a post-employment restrictive covenant. With that rationale in mind, what is to prevent a salesperson, who has secretly been recruited by a competitor, from purposely trying to be terminated rather than resigning and then working for the competitor free of the constraints of the restrictive covenant.
In reaching its conclusion that the restrictive covenant presented in the instant case is not reasonable and, therefore, unenforceable, the majority relies heavily on the principle that “[p]ost-employment restrictive covenants are subject to a more stringent test of reasonableness than covenants ancillary to the sale of a business”. I am cognizant of the fact that this heightened scrutiny is the result of the fact that a covenant not to compete may place undue hardship upon an individual who would have to make significant changes in his life in order to avoid violating the covenant. However, while courts have been traditionally reluctant to enforce these covenants, the fact remains that they must be decided on a case by case basis and a balancing test must be employed.
The test to be applied in determining whether a post-employment restrictive covenant is enforceable is well-settled. The trial court looks to the adequacy of the consideration, the necessity to protect the employer’s interest and the reasonableness of the time and scope of the restriction. In the instant case, Appellant was adequately compensated for entering into the agreement, the need to protect Appellee’s interests was clearly illustrated and the time and scope of the covenant was made reasonable by the trial court.
If there is no risk of harm to the employer, the trial court can refuse to enter an injunction. The issue before us is whether the record supports the trial court’s conclusion and I find that it does.
Accordingly, I would affirm the trial court’s Order.