Rullex hired Karnei, whose small business was named Tel-Stream, and subcontracted cell-tower work to Karmei. As part of the contract, Karmei signed a non-compete agreement (“NCA”). However, Karmei signed the NCA sometime after he had begun working for Rullex. When Rullex learned that Karmei’s company was working for one of Rullex’s competitors, Rullex sued, alleging that Karmei violated the terms of the NCA. The trial court ruled against Rullex. The PA Supreme Court addressed whether an employer can enforce an NCA in the post-employment timeframe although no new consideration was supplied in connection with its execution.
The Court noted that restrictive covenants have been deemed enforceable absent fresh consideration in situations where the parties contemplated and intended that, incident to the employment relationship, the employee would be bound by its substantive terms – and the employee ultimately signed it shortly after the first day. The Court affirmed the trial court, finding no evidence to suggest that, as of the commencement of the employment relationship, there was a meeting of the minds as to the NCA, or that Karnei otherwise manifested his assent to provisions of the NCA or an intent to be bound by them.