Regular Session 2017-2018 House Bill 1938 P.N. 2754

PRINTER'S NO. 2754

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1938

Session of

2017

INTRODUCED BY CALTAGIRONE, DeLUCA, DRISCOLL AND ZIMMERMAN,

NOVEMBER 27, 2017

REFERRED TO COMMITTEE ON LABOR AND INDUSTRY, NOVEMBER 27, 2017

AN ACT

Prohibiting enforcement of covenants not to compete in

employment agreements.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Short title.

This act shall be known and may be cited as the Freedom to

Work Act.

Section 2. Declaration of policy.

The General Assembly finds and declares as follows:

(1) The Commonwealth has a strong interest in applying

its laws and protecting its businesses so they can hire the

employees of their choosing.

(2) The Commonwealth has a strong interest in lowering

the unemployment rate and providing individuals every

opportunity to make a living wage and maximize their talents

to provide for their family.

(3) The Commonwealth has a strong interest in promoting

increased wages and benefits for working families.

(4) The Commonwealth has a strong interest in promoting

innovation, entrepreneurship, business expansion and

improving existing business opportunities to attract the best

qualified worker for open positions.

(5) The Commonwealth has a strong interest in promoting

unrestricted trade and mobility of employees in the work

force as well as promoting businesses' abilities to seek the

best qualified candidates for employment.

(6) The Commonwealth has a strong interest in workers

with high skill levels to increase their income and benefits.

(7) The Commonwealth has a strong interest in attracting

major multinational high-tech companies to this Commonwealth

who plan to invest billions of dollars and hire tens of

thousands of employees in high-paying jobs.

(8) The Commonwealth disfavors workers being forced to

decide between staying in jobs they are overqualified for or

leaving the State for better opportunities.

(9) The Commonwealth has a strong interest in providing

its residents with the tools needed to stay in Pennsylvania

to live, work and raise families.

Section 3. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Covenant not to compete." An agreement between an employer

and employee that is designed to impede the ability of the

employee to seek employment with another employer.

Section 4. Prohibition.

Except as provided in section 5, a covenant not to compete is

illegal, unenforceable and void as a matter of law. No court may

20170HB1938PN2754 - 2 -

rewrite a covenant not to compete.

Section 5. Exceptions.

A covenant not to compete that satisfies any of the following

shall not be subject to section 4:

(1) A covenant not to compete that is reasonable and

involves an owner of a business that sells the business or

sells the goodwill in the business and that is reasonable.

(2) A covenant not to compete that involves a

dissolution or disassociation of a partnership or a limited

liability company.

(3) A covenant not to compete that is reasonable, in

effect prior to the effective date of this section and may

not be renewed.

Section 6. Attorney fees and damages.

An employee shall:

(1) Receive an award of attorney fees after prevailing

in a suit against an employer related to the enforcement of a

covenant not to compete.

(2) Be entitled to damages, including punitive damages,

after prevailing in a suit against an employer related to the

enforcement of a covenant not to compete.

Section 7. Venue, personal jurisdiction and governing law.

A dispute arising out of or related to a covenant not to

compete involving a resident of this Commonwealth shall be:

(1) Exclusively decided by a State court within this

Commonwealth.

(2) Governed by the laws of this Commonwealth.

Section 8. Effective date.

This act shall take effect immediately.

20170HB1938PN2754 - 3 -