Two Nonsolicitation Mistakes That Can Cost Employers an Injunction

Key Takeaways

• Mid‑employment covenants need fresh, documented consideration.
• Overly broad client clauses risk injunction denial.
• No geographic limit expands restriction scope excessively.
• Evidence of solicitation essential for emergency relief.
• Court scrutiny focuses on “potential customers” language.

Summary

Pennsylvania Superior Court upheld a trial court’s denial of a preliminary injunction against former wealth advisors, citing two common drafting errors in nonsolicitation agreements. The court found the mid‑employment covenants lacked new consideration and the client restriction was overly broad, covering potential customers without geographic limits. Without evidence of actual solicitation, the employer could not demonstrate immediate harm. The ruling underscores the importance of clear consideration and narrowly tailored client clauses for enforceability.

Pulse Analysis

Restrictive covenants sit at the intersection of employment law and competitive strategy, and Pennsylvania courts have long required that any post‑hire agreement be supported by fresh, tangible consideration. The recent appellate decision reaffirms the Socko precedent, emphasizing that a mere promise of continued employment or routine salary adjustments does not satisfy the statutory threshold. Employers must therefore tie the covenant to a distinct benefit—such as a promotion, bonus eligibility, or enhanced severance—to survive preliminary injunction challenges.

Equally critical is the precision of client‑based nonsolicitation language. The court’s discomfort with a clause that swept "potential customers" and omitted geographic limits illustrates how overbroad drafting can render an agreement vulnerable. Pennsylvania jurisprudence permits client restrictions when they are narrowly linked to relationships cultivated during employment, but any ambiguity—especially regarding pre‑existing contacts—invites judicial skepticism. Adding a reasonable geographic scope or explicitly defining the client set can narrow the prohibition to protect legitimate business interests without overreaching.

For practitioners, the decision offers a clear checklist: document the consideration tied to any mid‑employment covenant, craft client restrictions that reflect actual business ties, and be prepared with concrete evidence of solicitation when seeking emergency relief. By aligning agreement terms with statutory requirements and evidentiary standards, employers can preserve the leverage of injunctive relief and safeguard their client portfolios against poaching, a priority that resonates across industries facing talent mobility challenges.