In an apparent issue of first impression, the Pennsylvania Superior Court has invalidated a no-hire provision in the case of trucking company employees seeking jobs at a competitor.
A split three-judge panel affirmed a Beaver County Court of Common Pleas decision upholding a nonsolicitation provision in the contract between Pittsburgh Logistics Systems and Beemac Trucking, but denying enforcement of a no-hire provision.
In the court’s majority opinion, Judge Paula Francisco Ott reiterated the trial court’s position.
“In denying PLS injunctive relief regarding the no-hire provision, the trial court determined that such a provision has never been upheld in Pennsylvania; indeed, this provision may never have been the subject of litigation,” Ott said. “The trial court agreed with the logic of those states which do not allow such provisions between companies, and determined that this provision would violate public policy by preventing persons from seeking employment with certain companies without those persons receiving additional consideration, or even necessarily having any input in or even knowledge of the restrictive provision.”
“Additionally,” Ott continued, “the trial court reasoned that the no-hire provision was overly broad in that the non-solicitation provision acted to protect PLS from the loss of its clients, which was the ultimate purpose of the restrictions. Based upon the nature of our review, we agree with the trial court.”
Ott said the trial court found that the no-hire provision violated public policy by disallowing nonsignatories the opportunity to work elsewhere.
“The PLS motor carrier services agreement ostensibly prevents the other signing company from hiring any PLS employee for the term of the agreement, which is self-renewing, and two years thereafter,” Ott said. “Accordingly, each new client of PLS, upon signing the motor carrier services contract, results in a new restriction upon current employees from obtaining new employment in the same or similar field of work.”
“Employment restrictions are allowed, under certain circumstances, between employer and employee,” she said. “However, in those instances, when a new restriction is added, to be enforceable, it must be supported by additional consideration.”
If the restriction “between companies, is allowed, then PLS would essentially be evading the requirement to pay additional consideration in exchange for additional restrictions. This example, viewed with the trial court’s reasoning, demonstrates this aspect of its decision is also based upon reasonable grounds,” she said.
In her dissenting opinion, Judge Mary Jane Bowes said, “Since this matter involves an issue of first impression, and there is strong support on both sides of the issue among our sister jurisdictions, I would find that the trial court abused its discretion in ruling that PLS was not entitled to a preliminary injunction enjoining Beemac from hiring its employees.”
William Stickman of Del Sole Cavanaugh Stroyd represents PLS and said he and his client “are exploring all possible options, including rehearing en banc and an allocatur petition.”
Paul Steinman of Eckert Seamans Cherin & Mellott represents Beemac and did not return a call seeking comment.