Non-Competes, Covenants, and Contracts Amid the Great Resignation in Pennsylvania
By Steve Grubb and Steve Coccorese
Salzmann Hughes, P.C. Law Firm
Labor and Employment Practice Group
Carlisle | Chambersburg, Pennsylvania
“The Great Resignation.” “The Great Reshuffle.” Whatever name you assign the phenomenon, an undeniable change is being documented throughout the labor market in the US.
Just under 4 million Americans quit their jobs in April 2021, the highest recorded number in 20 years. We saw that trend continue over a year later into May 2022, when 4.3 million people quit their jobs, which marked 12 months in a row that “job quits” exceeded 4 million, according to the most recent Job Openings and Labor Turnover Survey (JOLTS), published by the Bureau of Labor Statistics (BLS), Department of Labor.
This "quit rate” can demonstrate overall trends in workers’ willingness or ability to voluntarily leave jobs, compared to layoffs and discharges, which are defined by the BLS as, “involuntary separations initiated by the employer.” Quit rates frequently referenced throughout The Great Resignation, however, only provide a narrow view of the broad picture of net employment change. In contrast to the JOLTS data on “job quits,” over the last 12 months ending in May 2022, 77.7 million people were hired, while 78.4 million people separated from their job (voluntarily or involuntarily), resulting in a net employment gain of 6.4 million.
With so many workers leaving their jobs, and so many employers looking to hire, the job market is currently full of opportunities. A new Pew Research Center survey indicates employees are quitting on their own free will, not to seek unemployment benefits, but rather to find better pay, more opportunities for advancement, and better work-life balance and flexibility in a post-pandemic culture.
If you find yourself among the nearly half of Americans thinking about switching jobs today, you may have concerns about the terms under which you were hired. What happens if you have agreed not to solicit your current employer’s customers, or not to compete with your employer’s business? Does that dream job have to be put on hold?
Covenants like these (often called “restrictive covenants”) are, generally, enforceable in Pennsylvania, provided they are reasonable. A few things to consider when evaluating the restrictive covenants in an employment agreement:
- Does the restrictive covenant protect your employer’s legitimate business interest or is it more of a punishment or impediment to your future work?
- Are the time and geographic limitations reasonable? Do they protect your employer’s business interests or do they seem to be random numbers with no relation to your work?
- Was your restrictive covenant supported by consideration (for example, additional pay, stock, bonus, etc.)?
- Does the restrictive covenant prevent you from making a living in your chosen field?
Amid The Great Resignation, Salzmann Hughes, P.C. assists employees interested in transitioning careers. Our Labor and Employment practice group can review your current employment agreement and advise you of your rights to help you make a sound decision on your future.
Anwar, M. (2022, March 28). Council post: The 'great resignation' is your company's culture wake-up call. Forbes. Retrieved April 4, 2022, from https://www.forbes.com/sites/forbesbusinesscouncil/2022/03/25/the-great-resignation-is-your-companys-culture-wake-up-call/?sh=18820aca2964
ChiewTong_G. (2022, March 25). Is the great resignation over? far from it, experts say. CNBC. Retrieved April 4, 2022, from https://www.cnbc.com/2022/03/25/jobs-is-the-great-resignation-over.html
Parker, K., & Horowitz, J. M. (2022, March 10). Majority of workers who quit a job in 2021 cite low pay, no opportunities for advancement, feeling disrespected. Pew Research Center. Retrieved April 4, 2022, from https://www.pewresearch.org/fact-tank/2022/03/09/majority-of-workers-who-quit-a-job-in-2021-cite-low-pay-no-opportunities-for-advancement-feeling-disrespected/
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US Department of Labor . (2022, July 6). Job Openings and Labor Turnover - May 2022 - Federal Report USDL-22-1442. Retrieved July 12, 2022, from https://www.bls.gov/news.release/pdf/jolts.pdf