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Employee Restrictive Covenant Agreement

Cover Terms

The terms below are incorporated into and form part of this agreement.

Employer[Legal name of the entity that employs the employee]
Employee[Full legal name of the employee]
Employee Title / Position
Effective Date[Effective date of this agreement — the date the last party signs. It anchors the duration presumptions stated in Cover Terms.]
Governing LawPennsylvania
New Consideration for a Mid-Employment Covenant
Confidentiality
Trade Secrets DurationPerpetual
Other Confidential Information Duration24 months
Employee Non-Solicitation
Duration24 months
Market benchmark (based on 76 companies)HideShow
TermFrequency
12 months44.7%
Selected default24 months34.9%
18 months11.2%
Why this selected default?

Why is this the selected default?

24 months matches the modal employee non-solicit term observed in benchmarked, publicly-filed employee agreements; 12 months is the common lighter alternative. The Act sets no express duration presumption for the no-hire category, so the uniquely-essential scope limit does the primary category work; counsel should size the term to the workforce interest actually protected.

Customer Non-Solicitation
Duration12 months
State-law basis 12 months

Reference only — not part of this agreement.

12 months sits well inside the presumptively reasonable window for a current-customer non-solicit: eighteen months, or for as long as post-separation consideration is paid, whichever is greater. Counsel may extend toward eighteen months, or longer while post-separation consideration is paid, where the interest supports it.

No Business with Covered Customers
Duration12 months
State-law basis 12 months

Reference only — not part of this agreement.

12 months sits within the current-customer window. Because non-dealing has no category of its own, it is drawn to fit inside the current-customer non-solicit exception, and its duration tracks that category's presumption.

Non-Investment
Duration12 months
Non-Disparagement
Duration24 months

Standard Terms

1. Defined Terms

“Competitive Business” means the business activities described in Cover Terms under Competitive Business.

“Confidential Information” means non-public information relating to Employer's business, including trade secrets, customer lists, pricing, business processes, technical data, and strategic plans, but excluding information that becomes public through no fault of Employee.

“Covered Customers” means customers, vendors, referral sources, and business partners with whom Employee had material contact or for whom Employee had responsibility during the 12 months before termination of employment, and does not include any customer, vendor, referral source, or business partner whose relationship with Employer predated Employee's employment.

“Covered Employees” means employees with whom Employee worked or whom Employee managed during the 12 months before termination of employment.

“Passive Public Holdings” means ownership of securities of a publicly traded company representing less than five percent of any class of such company's securities, and interests in diversified mutual funds, index funds, and exchange-traded funds that may hold securities of a Competitive Business.

“Protected Interests” means Employer's Confidential Information, Employer's trade secrets, Employer's goodwill in its customer, vendor, referral-source, and business-partner relationships, and the specialized training, skills, and carefully guarded methods of doing business that Employer provides to Employee, but not Employer's interest in avoiding ordinary competition.

“Restricted Period” means the duration specified in Cover Terms for each covenant, beginning on the date Employee's employment with Employer ends for any reason.

“Restricted Territory” means the geographic area described in Cover Terms under Restricted Territory.

“Solicit” means to affirmatively contact, approach, induce, encourage, or entice a person or entity, directed at a Covered Customer or Covered Employee, for the purpose of diverting business away from Employer or of recruiting a Covered Employee, and does not include Employee's mere acceptance of business from a Covered Customer who seeks Employee out, responding to general advertisements, or responding to unsolicited inquiries not initiated by Employee.

“Trade Secrets” means information that qualifies for trade-secret protection under applicable Pennsylvania and federal law, including the Pennsylvania Uniform Trade Secrets Act, for as long as the information continues to derive independent economic value from not being generally known and remains the subject of reasonable efforts to maintain its secrecy.

Drafting Note Solicitation

A Pennsylvania non-solicitation clause that bars merely accepting business or omits a geographic limit invites a finding that it is unenforceable as written. A clause restricted to affirmative solicitation of customers the employee actually served stays within the reasonableness the courts require; a no-accept or geographically unbounded clause does not .

Drafting Note Affirmative outreach and a geographic limit

A customer non-solicit reaches only affirmative outreach — solicit, divert, and entice each require an affirmative act, so a clause that reaches merely accepting business from a customer who seeks the employee out sweeps in conduct that is not a breach . A clause with no geographic scope has been held unenforceable as written, which makes the geographic limit load-bearing , and a clause extended to customers whose relationships predated the employment reaches conduct held unreasonable . A customer non-solicit scoped this way, backed by the confidentiality and trade-secret protections, is often a stronger and more readily enforceable protection than a broad non-compete. The optional no-business covenant reaches the passive acceptance of business that the affirmative-act reading leaves free, so it presses harder on the reasonableness elements and needs its own justification, sized tightly to the goodwill it protects — a considered risk decision rather than a default .

2. Recitals and Protectable Interests

Employer and Employee acknowledge that each restrictive covenant in this agreement is ancillary to the employment relationship between them and is supported by adequate consideration. Employee will receive access to Employer's Confidential Information and trade secrets and will develop customer relationships and goodwill on Employer's behalf, and Employer would not provide Employee with access to these Protected Interests absent the protections in this agreement. The parties acknowledge that each covenant is intended to protect one or more of Employer's Protected Interests and not to eliminate ordinary competition, that each covenant imposes no restraint greater than is reasonably necessary for that protection, and that each covenant is reasonably limited in duration and geographic extent.

Drafting Note The four-part enforceability test

Pennsylvania has no general non-compete statute, so nothing in the agreement substitutes for the common-law reasonableness analysis every covenant must survive: a covenant is enforceable only when it is ancillary to employment, supported by adequate consideration, reasonably limited in duration and geography, and tied to a legitimate protectable interest . The acknowledgments tracking those four elements are not self-proving, and a covenant survives only where the structural work behind them holds — each covenant confined to Covered Customers or Covered Employees through the look-back windows, a real geographic limit in place, and the restraint tied to Protected Interests rather than ordinary competition — because a covenant is only prima facie enforceable when reasonably limited in duration and geographic extent . Governing-law and venue choices that track where the employee actually lives and works leave the covenant measured against the law it was drafted for; a mismatch tees up a choice-of-law fight on top of the merits .

Drafting Note Protectable interests

A Pennsylvania non-compete that blocks competition disconnected from a protectable interest reaches beyond what the law will enforce. A restraint tied to specific trade secrets, confidential information, customer goodwill, or genuinely specialized training rests on a recognized interest; one aimed at ordinary competition is not reasonably necessary to protect the employer .

Drafting Note Recognized interests and the return record

The interest behind each covenant in the agreement holds up only where it is one Pennsylvania actually recognizes — confidential information, trade secrets, customer goodwill, or the specialized training, skills, and carefully guarded methods of doing business the employer provides — and not the employer's bare interest in avoiding ordinary competition . The return, deletion, and certification mechanics are not boilerplate: they build the record of what Confidential Information left and what came back, make the Protected Interests concrete rather than rhetorical, and count as part of the employer's reasonable efforts to maintain trade-secret secrecy — which matters because these covenants are enforced only so far as reasonably necessary for the employer's protection .

Drafting Note Duration and territory sized to the real market

A non-compete's duration and territory hold up only when sized to the employee's real role and the employer's real market; a recital that they are sized is not enough, because a Pennsylvania court weighs time and territory together against that market . The real Specified Competitors named in Cover Terms narrow the covenant, are strong evidence the restraint is no greater than reasonably necessary, and leave the employee the rest of the industry. The remedies clause's irreparable-harm acknowledgment does not carry the equitable showing a court will demand — enforcement remains limited to restraints reasonably necessary for the employer's protection and reasonably limited in duration and geographic extent .

Drafting Note A bounded, breach-tied extension

A tolling clause holds up only where it is bounded — extending the restricted period day for day during an actual breach, not automatically or indefinitely — because no Pennsylvania statute or appellate decision squarely endorses automatic tolling, and any extension is itself a restraint that must remain reasonably necessary and reasonably limited in duration . A covenant is only prima facie enforceable when reasonably limited as to time, which cuts against an open-ended or indefinite extension; the extension stands as a separate, breach-tied restraint, and an expired covenant is not one a court will assume to revive .

3. Timing, Consideration, and Employee Acknowledgements

This agreement is effective as of the Effective Date listed in Cover Terms. If this agreement is signed at the outset of employment, the offer and commencement of employment is the consideration for the covenants in this agreement. If Employee signs after employment has begun, Employer will provide the new consideration described in Cover Terms under New Consideration for a Mid-Employment Covenant. Employee acknowledges having had the opportunity to consult with independent legal counsel before signing this agreement.

Drafting Note New consideration

When an existing Pennsylvania employee signs a new covenant, neither continued at-will employment nor an intend to be legally bound recital supplies the consideration the covenant needs; the recital did not save the agreement in Socko. A covenant supported instead by identifiable new consideration — a raise, bonus, or promotion, documented as such — stands on ground the recital cannot furnish .

Drafting Note New consideration and signing timing

The specific new consideration recorded in Cover Terms is what carries a mid-employment covenant; continued at-will employment and an intent-to-be-legally-bound recital do not. Continued employment alone is not adequate consideration for a mid-employment covenant, and the Uniform Written Obligations Act recital cannot substitute for new and valuable consideration in this context . Where the employee signs shortly after the first day of work, start-of-employment consideration holds only if the parties agreed to the covenant's essential provisions at the start of the relationship; absent that agreement the covenant needs new consideration of its own . A covenant added or expanded by a later amendment is a later-agreed restraint that needs its own new consideration . And adequate consideration establishes only that the covenants are supported, not that they are reasonable — each covenant must independently satisfy the reasonableness elements on duration, geography, and scope .

4. Confidential Information and Trade Secret Protection

Employee must treat all Confidential Information as strictly confidential. Employee must not use or disclose Confidential Information except as required to perform authorized job duties or with Employer's prior written consent. Employee's obligations regarding Trade Secrets continue in perpetuity, for as long as the information remains a Trade Secret. Employee's obligations regarding other Confidential Information continue for the period specified in Cover Terms. This confidentiality obligation operates alongside, and independent of, each restrictive covenant in this agreement, and does not restrict Employee's use of the general knowledge, skill, and experience Employee acquired during employment.

5. Permitted Disclosures and Protected Conduct

Nothing in this agreement prohibits Employee from: (a) reporting possible violations of law to any government agency, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other federal, state, or local agency; (b) making disclosures protected under whistleblower provisions of any law; (c) discussing wages, hours, or other terms and conditions of employment as protected by applicable law, including Section 7 of the National Labor Relations Act (29 U.S.C. § 157); (d) testifying truthfully in legal proceedings or making disclosures required by law, court order, or a government investigation, with notice to Employer where lawful; or (e) filing a sealed complaint in court using Confidential Information without liability. Pursuant to the Defend Trade Secrets Act (18 U.S.C. § 1833(b)), Employee may not be held criminally or civilly liable for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed court filing.

6. Return, Deletion, and Certification of Company Property

Upon termination of employment, Employee must promptly return to Employer all documents, devices, files, credentials, and other materials containing or relating to Confidential Information. Where permitted, Employee must permanently delete electronic copies of Confidential Information from personal devices and accounts. Employee must certify compliance with this section in writing upon Employer's request.

7. Non-Solicitation of Employees

During the Restricted Period, Employee must not Solicit, recruit, hire, or attempt to hire any Covered Employee. This restriction does not prohibit Employee from providing a professional reference upon request or from hiring a person who responds to a general advertisement not directed specifically at Employer's employees. This covenant is included to protect Employer's Protected Interests, including its workforce stability and goodwill, and is drawn no broader than reasonably necessary to protect them.

Drafting Note No-hire clauses

A no-hire or no-poach clause buried in a Pennsylvania commercial services contract is not a reliable protection. After Beemac, such clauses are vulnerable as unreasonable restraints of trade, while legitimate interests protected through narrowly drawn confidentiality and direct restrictive covenants supported by consideration rest on firmer ground .

8. Non-Solicitation of Customers, Vendors, Referral Sources, and Business Partners

During the Restricted Period, Employee must not Solicit the business of any Covered Customer within the Restricted Territory. This covenant restrains only Employee's affirmative outreach: Employee's mere acceptance of business from a Covered Customer who seeks Employee out is not a breach. The covenant reaches only Covered Customers with whom Employee had material contact and does not reach customers whose relationships with Employer predated Employee's employment. This covenant is included to protect Employer's goodwill in its customer relationships and is drawn no broader than reasonably necessary to protect it.

9. No Business with Covered Customers

During the Restricted Period, Employee must not accept, service, or do business with any Covered Customer within the Restricted Territory, regardless of whether Employee or the Covered Customer first initiated contact. This covenant reaches only Covered Customers with whom Employee had material contact, and is included to protect Employer's goodwill in its customer relationships and drawn no broader than reasonably necessary to protect it.

10. Non-Investment

During the Restricted Period, Employee must not acquire or hold any active ownership interest in, serve as a director, officer, manager, or advisor to, or have material economic participation in any Competitive Business. This covenant is included to protect Employer's Protected Interests and is drawn no broader than reasonably necessary to protect them. Passive Public Holdings are permitted.

11. Non-Disparagement

During the Restricted Period specified in Cover Terms for Non-Disparagement, Employee must not make statements that are intended to or reasonably likely to disparage Employer, its officers, directors, employees, products, or services. This section does not restrict Employee from making truthful statements in legal proceedings, providing truthful testimony, making disclosures to government agencies, or exercising rights protected by law, including rights protected under Section 7 of the National Labor Relations Act.

12. Health Care Practitioner Covenants and Patient Notice

If Employee is a health care practitioner covered by the Fair Contracting for Health Care Practitioners Act — a medical doctor, a doctor of osteopathy, a certified registered nurse anesthetist, a certified registered nurse practitioner, or a physician assistant — then, notwithstanding any other provision of this agreement: (a) no noncompete covenant in this agreement restrains Employee for more than one year; (b) no noncompete covenant in this agreement is enforceable by Employer if Employer dismissed Employee; and (c) nothing in this agreement treats Employee's departure or destination as Confidential Information that Employer may not communicate to patients, and nothing in this agreement restricts or delays any notice to patients that applicable law requires Employer to provide. If any other provision of this agreement conflicts with this section, this section controls.

Drafting Note Act 74's one-year and no-dismissal limits

For any of the five covered classes — medical doctors, doctors of osteopathy, certified registered nurse anesthetists, certified registered nurse practitioners, and physician assistants — Act 74 sets the operative limits: a practitioner covenant beyond one year is void, and none is enforceable after the employer dismisses the practitioner . A noncompete covenant entered into after the Act's effective date of January 1, 2025 is contrary to public policy and void and unenforceable by an employer , subject only to the narrow exception where the covenant runs no more than one year and the practitioner was not dismissed ; ordinary reasonableness analysis does not save a covered covenant that exceeds those limits. The Act does not bar a provision recovering reasonable, practitioner-specific expenses — relocation, training, and patient-base establishment costs accrued within the three years before separation, amortized over up to five years, unavailable after a dismissal — but the agreement does not include one, so any such provision is present only as a deliberate addition .

Drafting Note The patient-notice statutory duty

The 90-day patient-notice obligation restated as an employer covenant adds nothing and creates a parallel breach claim: it is a statutory duty the employer owes regardless of the agreement . When a covered practitioner departs, the employer must notify the patients the practitioner saw within the past year — where there was an ongoing outpatient relationship of at least two years — within 90 days of the departure, whether or not any covenant survives . The risk runs the other way: a form that treats the practitioner's departure or destination as confidential information the employer cannot communicate to patients, or that otherwise restricts or delays a legally required notice, obstructs that duty. A covered practitioner's agreement thus turns, on review, on whether that notice plumbing is left unobstructed.

13. No Conflicting Obligations

Employee represents that performing duties for Employer and complying with this agreement does not conflict with any prior agreement, court order, or legal obligation binding on Employee. Employee must promptly disclose to Employer any potential conflict that arises during employment.

14. Notice to Future Employers and Other Third Parties

Employer may disclose the existence and terms of this agreement to any prospective employer or business associate of Employee if Employer has a reasonable belief that Employee may breach this agreement. Employee consents to this disclosure.

15. Tolling During Breach

If Employee breaches any restrictive covenant in this agreement, the Restricted Period for that covenant is extended by one day for each day of the breach, so that the full duration of the restriction runs from the date the breach ends. Any extension under this section is limited to the duration of the actual breach, and the parties do not intend any open-ended or indefinite extension.

16. Remedies

Employee acknowledges that a breach of this agreement may cause Employer irreparable harm for which money damages would be inadequate, and that Employer may seek injunctive or other equitable relief in addition to any other remedies available at law. Any provision for attorney's fees and costs applies to the prevailing party on a mutual basis.

17. Enforceability and Severability

If any provision of this agreement is found to be unenforceable, the remaining provisions remain in full force and effect.

18. Survival and Expiration of Each Covenant

Each restrictive covenant in this agreement survives the termination of Employee's employment for the Restricted Period specified in Cover Terms for that covenant, independently of every other covenant. Obligations under the Confidential Information and Trade Secret Protection section survive for as long as the relevant information remains a Trade Secret. All other provisions survive to the extent necessary to enforce rights that arose during employment.

19. Assignment and Successors

Employee may not assign this agreement or any rights or obligations under it. Employer may assign this agreement, expressly including each restrictive covenant in it, to any affiliate, successor, or acquirer of all or substantially all of Employer's business or assets, whether by sale of assets or otherwise. This agreement is binding on and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns.

Drafting Note Assignment

A Pennsylvania non-compete does not travel with the business in an asset sale on its own. A buyer can enforce existing covenants only where each agreement contains an express assignability provision, because Hess bars automatic assignment without one .

Drafting Note Covenant-specific assignability

An assignment clause that expressly names each restrictive covenant, rather than a boilerplate successors-and-assigns recital, is what an asset buyer can rely on, because a Pennsylvania restrictive covenant in an employment agreement is not assignable to a purchasing entity in a sale of assets absent a specific assignability provision . The covenant is otherwise personal — confined to the employer with whom the agreement was made — so a generic recital that never mentions the restrictive covenants leaves an asset buyer with nothing to enforce . An edit that trims the express covenant reference out of that clause removes what makes it enforceable.

20. Governing Law, Venue, and Dispute Process

This agreement is governed by the law listed in Cover Terms. Disputes will be resolved in the courts of the Governing Law state, subject to non-waivable rights under applicable law.

21. Entire Agreement, Amendment, Waiver, and Electronic Signatures

This agreement constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior agreements, understandings, and negotiations on this subject. This agreement may be amended only in writing signed by both parties. A party's failure to enforce any provision does not waive that party's right to enforce it later. This agreement may be executed in counterparts, including by electronic signature, each of which is an original.

Signatures

By signing this agreement, each party acknowledges and agrees to the restrictive covenant obligations above. Employee confirms having read and understood each provision, including the Cover Terms.

Employer

Employer: [Legal name of the entity that employs the employee]

Signature:

Signatory Name: [Full name of the authorized signatory signing for the employer]

Title: [Title of the authorized signatory signing for the employer]

Date:

Employee

Signature:

Print Name: [Full legal name of the employee]

Date:

Adapted from OpenAgreements Wyoming and Florida restrictive covenant templates. Licensed under CC BY 4.0.