Employment Contracts

At Polishan Solfanelli, our attorneys in Scranton, Pennsylvania, fully recognize the significance of well-structured employment contracts for safeguarding the interests of both employers and employees. Whether you are preparing to onboard new talent or seeking to ensure existing agreements remain compliant with evolving labor regulations, our team is devoted to delivering precise and reliable guidance throughout the process. Employment contracts often address wages, benefits, non-compete clauses, confidentiality provisions, and dispute resolution mechanisms. With careful drafting and thorough review, you can reduce the risk of misunderstandings or potential litigation down the line. Our approach involves close collaboration with clients to understand their unique objectives and protect their legal rights at every stage. We believe that clarity and strong contractual foundations enhance workplace harmony and facilitate mutually beneficial working relationships. For guidance on your employment contract matters, call us at 570-562-4520. Reach out today to learn more about how we can help.

Common Provisions in Employment Contracts 

Employment contracts in Pennsylvania establish the basic framework of the working relationship, addressing roles, responsibilities, compensation, benefits, and various restrictive or protective clauses. Although at-will employment prevails in the Commonwealth as the default standard, written agreements can tailor or modify this presumption. A well-structured contract can help both employers and employees clarify expectations and avoid future misunderstandings. Below are several common provisions:

• Job Duties and Responsibilities: Clarity is vital to reduce any ambiguity about an employee’s role. In Pennsylvania, handling disputes stemming from unclear job descriptions can be time-consuming and costly for both parties. Employers often list specific tasks, performance objectives, or project deliverables. By specifying clear guidelines, schedules, or performance metrics (e.g., sales targets, project deadlines), both parties understand the grounds on which performance will be measured.
• Compensation: Employment contracts frequently detail how compensation is calculated and paid—salary, hourly pay, commissions, bonuses, or incentives. Pennsylvania law generally defers to an employer and employee’s agreement so long as minimum wage and overtime obligations remain satisfied. Employers can also use piecework arrangements or production-based pay structures, but it is essential to delineate the specific formula governing these approaches. If commission structures are involved, explaining when commissions vest and under what circumstances they are owed helps mitigate conflicts. Some employees have faced disputes over whether commissions were due after termination or resignation. Clear language on timing (e.g., monthly, quarterly) and specific triggers for accrual or payment can reduce the risk of litigation.
• Benefits: Many agreements summarize health insurance and retirement savings options, but it is useful to confirm that no contract provision undermines obligations imposed by state or federal law, including wage and hour rules and any relevant Pennsylvania mandates. While Pennsylvania does not currently require private employers to offer short-term disability benefits in all circumstances, certain organizations choose to include them as part of compensation packages. In contrast, some local jurisdictions within Pennsylvania could have special provisions regarding paid sick leave or other forms of mandated leave. If an employer is subject to local ordinances, the contract should align with that area’s regulations. Pennsylvania employees might also inquire about the waiting periods or eligibility criteria for coverage, especially if the employer is large enough to be subject to federal laws like the Affordable Care Act (ACA). Ensuring the document states any waiting period or probationary requirement avoids confusion about when benefits take effect.
• Termination Provisions: Despite Pennsylvania’s at-will standard, employers or employees sometimes want to set conditions for ending the relationship. Defining “cause,” such as serious misconduct or failure to meet critical performance goals, can convert an otherwise at-will situation into something akin to “for-cause” employment. Additionally, some contracts specify notice periods (e.g., a requirement that the employee give two weeks’ notice or that the employer grant the employee a certain length of time before formal separation). Employers could incorporate severance arrangements, though no Pennsylvania statute mandates severance pay. If a severance clause appears in the contract, outlining how the severance is calculated and under what circumstances it is paid can help reduce disputes.
• Confidentiality: Safeguarding trade secrets, client lists, or proprietary data often proves central to an employer’s business interests. Under Pennsylvania’s adoption of the Uniform Trade Secrets Act, legally protected information is that which (1) is not generally known to the public, (2) yields a competitive or economic advantage, and (3) remains confidential through reasonable employer efforts. A confidentiality or nondisclosure provision in an employment contract clarifies what constitutes protected information, allowed uses of such information, and the employee’s obligations upon leaving. Employers are reminded to draft these clauses in alignment with other legal requirements protecting employees’ rights to discuss working conditions, including wages or workplace policies, particularly under federal labor laws. Balancing legitimate business interests with lawful employee rights is important for enforceability.
• Intellectual Property Assignments: In many Pennsylvania workplaces, employees produce inventions, designs, or creative works. The typical presumption is that creations made in the course and scope of employment belong to the employer. Still, the contract should explicitly state which party holds ownership rights in any job-related or employer-funded creations. For example, certain intellectual property clauses specify that if an invention is produced during working hours using the employer’s resources, ownership automatically transfers. Conversely, contracts often disclose that personal or non-work-related inventions remain with the employee. Clear language can help avoid conflicts over claims of ownership if an employee resigns and continues developing a project started at work.
• Non-Competition Clauses: A non-compete seeks to prevent an employee from competing with the employer for a set duration within a defined geographic area. Pennsylvania law requires that any such restrictive covenant protect legitimate business interests (e.g., trade secrets, specialized training, or goodwill) and that both time and geographic scope be no broader than necessary. Additionally, consideration given to an employee at the inception of a non-compete must be adequate and not merely rest on past promises. For existing employees, a raise or bonus may serve as valid fresh consideration. Because non-competes can limit a person’s ability to earn a living, courts scrutinize them closely for fairness.
• Non-Solicitation Clauses: Non-solicitation terms are often more limited than full non-compete restrictions. They typically focus on ensuring that the employee does not lure away the employer’s customers, clients, or workers after departure. As with non-competes, Pennsylvania courts will only enforce such provisions if they are narrowly tailored, supported by adequate consideration, and serve legitimate business goals rather than an overly broad aim of restricting competition. Employers often prefer non-solicitation clauses if they primarily want to protect a client base or workforce instead of completely barring a former employee from engaging in related work.
• Dispute Resolution: Employment contracts sometimes incorporate arbitration or mediation clauses. Arbitration can be binding or non-binding. Binding arbitration obligates both sides to abide by the arbitrator’s decision, excluding a later court action. Pennsylvania courts generally uphold arbitration provisions, provided they are not unconscionable or contrary to public policy. Drafting these clauses carefully, ensuring that employees realize they are waiving trial by jury, can boost their enforceability. Mediation is often viewed as a less formal, collaborative step preceding or replacing litigation. Either party may find it beneficial to engage a mediator before proceeding to court.

If you have questions or concerns about employment contract provisions, consider consulting a lawyer in Scranton, Pennsylvania for tailored guidance.

The At-Will Principle in Pennsylvania 

Pennsylvania law presumes that employment is at-will. Either party may terminate an at-will relationship for any lawful reason, or no reason at all. Including contract language about for-cause termination or specifying the grounds on which the employer may terminate can override the at-will status. Once an employer agrees to limit its termination rights, employees generally gain stronger job security. For instance, if a contract specifies “termination only due to misconduct,” firing the employee for reasons outside that scope risks a breach-of-contract claim.

Employees sometimes attempt to challenge a discharge by claiming an implied contract existed when an employer’s words or conduct promised long-term employment. However, Pennsylvania courts strongly favor the at-will paradigm, making implied-contract arguments difficult to sustain in litigation. Employers often incorporate disclaimers in employee handbooks or policies, stating that those materials do not create enforceable contract rights, and that employment remains at-will. Without explicit disclaimers, a handbook’s language can occasionally give rise to disputes where an employee asserts the employer promised disciplinary procedures or guaranteed continuation of employment.

If you have questions or concerns about your employment contract, consider speaking with a Scranton, Pennsylvania attorney to better understand your rights and options.

Non-Compete Agreements and Reasonableness 

Non-compete agreements bind the employee not to enter into competition with the employer for a certain period after the employment ends. Pennsylvania courts perform a multifaceted reasonableness test:

• Duration: Courts ask whether the length of time is truly needed to protect the employer’s legitimate interests, such as safeguarding customer goodwill or specialized training. A one-year term may be seen as acceptable for certain roles, but if an agreement extends to two or three years without clear justification, it may be invalidated or modified by the court.
• Geographic Scope: Restricting the employee’s ability to work should align with the actual areas where the employer operates or intends to expand in the near future. A provision that prohibits competition in the entire state (or beyond) may be unreasonable if the employer’s operations are confined to a small region. Conversely, a broader scope could pass scrutiny if the employer truly has a widespread customer base.
• Legitimate Business Interests: An employer’s desire to limit competition in itself is not enough. Rather, Pennsylvania law focuses on whether the employer is preserving something concrete, such as trade secrets, goodwill with existing clients, or specialized training provided to the employee. If the employer cannot identify a legitimate interest, the restriction is not enforceable.

Examples of reasonableness vary by industry. For instance, sales professionals with specialized training about proprietary products might face a one-year restriction in a limited geographic market. A newly onboarded employee without customer access may face difficulty justifying strict limitations. A court may choose to “blue pencil” an overly broad agreement by narrowing it to align with actual business needs. Employers drafting such clauses should aim for precision over broad or vague limitations.

Standalone Restrictive Covenant Agreements 

While many non-compete or non-solicitation provisions appear within the main employment contract, Pennsylvania employers sometimes use separate agreements dedicated solely to restrictive covenants. These standalone documents often surface when employees move into roles with heightened access to trade secrets, client relationships, or other strategic business knowledge. The same enforcement principles apply. Pennsylvania courts consistently require adequate consideration, define legitimate business interests, and assess reasonableness. If an employer decides to introduce a non-compete long after the employee is hired, it must furnish new, meaningful consideration (e.g., a raise or bonus) rather than rely on the employee’s original acceptance of the job.

Enforceability of Employment Contracts 

An employment contract must satisfy general contractual conditions under Pennsylvania law:

• Offer and Acceptance: There must be a clear offer (the employer’s proposal of terms) and acceptance (the employee’s assent). Ambiguities regarding critical elements—such as compensation or job responsibilities—can undercut an argument that a valid contract ever formed.
• Consideration: Both sides must exchange something of value. For employees, the promise to perform job functions and abide by any restrictions can be sufficient. For employers, providing wages, benefits, or bonuses often suffices. If an employer modifies the terms of employment midstream (e.g., adding or expanding a non-compete), the employee must receive something new in return for the updated contract to be enforceable.
• Capacity: Neither party may be under legal incapacity, such as being underage or mentally incompetent. If an individual can show they were coerced (i.e., forced under duress) to sign an agreement, Pennsylvania courts may rule it void or voidable.
• Public Policy: Certain provisions clash with public policy. Attempts to waive statutory rights (like minimum wage or entitlement to workers’ compensation) are not enforceable. Similarly, confidentiality clauses that bar employees from discussing wages or working conditions may run afoul of protections for concerted activity. Employers should ensure that contract restrictions do not override the basic rights secured by Pennsylvania or federal law.
• Unconscionability: If a clause is extremely unfair or one-sided, a court may deem it unenforceable. For example, an employee forced to accept an unreasonably restrictive clause without any meaningful consideration might claim unconscionability.
• Statute of Frauds and Oral Agreements: Some contracts that cannot be fully performed within one year must be in writing. However, a short-term employment arrangement—capable of being completed within a year—may be enforceable even if it is oral. A written contract reduces ambiguity and lowers the risk of disputes over its terms.

For guidance navigating the enforceability of employment contracts, consider consulting an attorney in Scranton, Pennsylvania.

Pennsylvania Wage Payment and Collection Law (WPCL) 

Pennsylvania’s Wage Payment and Collection Law is a significant statute affecting how employers compensate workers. While an employment contract sets forth the agreed-upon wages or benefits, the WPCL provides a statutory mechanism for recovering any unpaid amounts owed under that contract. If an employer fails to pay compensation—whether it is salary, commissions, bonuses, or accrued benefits that the contract or policy promised—employees can invoke the WPCL to seek payment.

One key feature of the WPCL is that it allows employees to recover damages beyond the base amount owed in some situations. In certain cases, a court may award an additional sum known as liquidated damages. Furthermore, if the employee succeeds in a WPCL claim, the court may require the employer to cover attorneys’ fees, which can be a substantial incentive for employees to use this statute to enforce wage-related rights. Employers who fail to carefully articulate their compensation policies in the contract risk WPCL claims. Stating clear payment schedules for commissions, bonuses, and final wages can help employers avoid liability under the WPCL.

Also, Pennsylvania courts interpret the WPCL to include compensation that is “earned” under the terms of an employment agreement. If a dispute arises over whether compensation was contingent on certain conditions (e.g., continued employment through a particular date), the contract’s language can be pivotal in determining if the worker met these terms. For these reasons, specific drafting in employment contracts is essential to align with WPCL obligations. Any language regarding earned wages, severance, commission payout timelines, or accrued vacation must match how the employer administers actual payments to the employee.

Suing for a Breach of an Employment Contract 

Despite best efforts, breaches sometimes occur. If an employer or employee is accused of violating the contract, Pennsylvania courts can award:

• Monetary Damages: The primary remedy involves compensating the non-breaching party. This typically encompasses the wages, commissions, or bonuses the employee would have received absent the breach. If the contract spells out a severance entitlement triggered by certain termination events, courts may also include that amount.
• Compensatory and Incidental Damages: An employee might claim losses beyond wages—for example, relocation costs undertaken in reliance on the employer’s promise of long-term employment. If those expenses were foreseeable, Pennsylvania courts may award damages to cover them. However, it is crucial to demonstrate that these losses stem directly and predictably from the breach.
• Equitable Remedies: When monetary damages alone fail to rectify the harm, courts might issue equitable relief. For instance, if an employee is violating a valid non-compete or confidentiality clause, an employer can request an injunction. Specific performance is rare in employment relationships, as courts hesitate to force an unwilling employer or employee to continue their arrangement, but injunctive orders that prohibit further breaches (e.g., using confidential information or soliciting customers) are more common.
• Overlapping Statutory Claims: Where wage payment issues arise, the WPCL can come into play. If allegations of discrimination or retaliation surface, employees might also file claims under relevant federal or state civil rights laws. These statutory dimensions sometimes offer broader remedies, including possible reinstatement or compensatory damages for emotional distress. Employers are advised to address potential statutory exposure alongside contract obligations, ensuring that contractual provisions do not inadvertently invite statutory claims.
• Punitive Damages: Generally, punitive damages are not awarded in contract matters unless conduct was especially willful or malicious. Pennsylvania courts rarely allow punitive damages in employment contract contexts unless an employer’s behavior meets a high threshold of egregiousness.

A Scranton, Pennsylvania lawyer can help you understand your rights and remedies if you are considering legal action for a breach of an employment contract.

Risk of Creating Implied Contracts Through Handbooks or Policies 

Alongside formal employment contracts, Pennsylvania employers commonly issue employee handbooks or internal policies. While these documents often aim only to communicate workplace procedures, they can inadvertently create implied contract rights if they contain language suggesting guarantees or mandatory processes. If a handbook outlines specific disciplinary steps before termination, for example, an employee might argue that the employer must follow those steps and, if it does not, the employee may assert a breach-of-contract claim despite being nominally at-will.

To minimize this risk, many employers include a prominent disclaimer in handbooks clarifying that the content does not constitute a contract and that employment remains at-will. Language that promises indefinite or guaranteed employment—particularly if couched as a benefit for “good behavior” or “loyalty”—can erode the at-will presumption. Pennsylvania courts weigh the totality of the circumstances when deciding if a handbook created enforceable rights. Consistent disclaimers, along with careful phrasing and alignment with any formal employment contract, help avoid unintended implied contractual obligations.

Additional Regulatory Overlaps Affecting Contracts 

While an employment contract is a binding agreement between employer and employee, it must also comply with a variety of regulatory restrictions:

• National Labor Relations Act Considerations: In Pennsylvania, even nonunion employees have rights under the National Labor Relations Act (NLRA) to discuss working conditions, wages, or other employment terms with colleagues. A confidentiality clause that prevents employees from discussing their pay or conditions of employment might infringe these federal protections. Employers drafting such clauses should ensure that they do not prohibit lawful “concerted activities” protected by law. Overly restrictive policies have been deemed unenforceable if they chill an employee’s right to speak about the terms and conditions of employment.
• Anti-Discrimination Laws: Federal and state laws ban discrimination based on race, gender, religion, age, disability, and other protected characteristics. Contract provisions that attempt to limit an employee’s rights to complain or bring actions under anti-discrimination statutes are unenforceable. Pennsylvania employers should remember that contract language cannot absolve them of statutory responsibilities, nor can it restrict employees’ ability to file charges with governmental agencies.
• Local Ordinances on Sick Leave or Other Benefits: Cities such as Philadelphia have instituted paid sick leave requirements for certain employers. If a contract is used in a locale with heightened statutory benefits, a properly drafted agreement ensures compliance. Employers operating across multiple Pennsylvania jurisdictions may need to vary contract terms according to local mandates.

Illustrative Examples of Non-Compete and Non-Solicitation Reasonableness 

Pennsylvania courts use a fact-specific approach when evaluating whether a restrictive covenant is reasonable. The following scenarios highlight how these factors play out in practice:

1. A mid-level sales associate with access to confidential pricing strategies signs a non-compete for one year, limited to the counties where the employer currently operates. If this sales associate departs, the one-year restriction could be deemed acceptable, especially if the employer invests heavily in specialized sales training. The geographic scope limited to a few counties might pass muster as necessary to safeguard client relationships.
2. An entry-level administrative assistant with minimal customer interaction is asked to sign a two-year, statewide non-compete covering every aspect of the employer’s industry. Given the low-level access to strategic secrets, a two-year ban across the state could be found unreasonable. If the employer fails to show a legitimate business interest or fresh consideration, a court may invalidate or reduce the agreement.
3. Non-solicitation covenants targeting only the employer’s actual or prospective customers might be upheld, provided the duration and geographic scope mirror where the employee established client relationships on the employer’s behalf. Overly broad language encompassing any potential client in an entire industry often fails the reasonableness test.

By tailoring restrictive covenants to match the employee’s responsibilities and the employer’s legitimate business interests, the likelihood of judicial enforcement increases. Employers should carefully assess the scope of information or customer relationships an individual will handle before setting restrictive terms. If you have questions about how these covenants apply to your workplace, consulting a lawyer in Scranton, Pennsylvania can help clarify your options.

Enhancing Clarity in Employment Contracts 

Precision in drafting strengthens enforceability and helps minimize disputes. The following approaches can benefit both parties:

• Define Key Terms: Vague words such as “cause,” “confidential information,” or “material breach” often spawn disagreement. Pennsylvania courts look first at the contract language to interpret these concepts. Clarity on these definitions enables more consistent application and predictable enforcement.
• Use Examples and Specifics: Illustrations can help. For instance, if performance metrics determine raises or bonuses, outline a sample calculation. For confidentiality, list categories of information considered proprietary (e.g., client lists, product roadmaps). Descriptions encourage a shared understanding of obligations.
• Detail Consideration for Restrictive Covenants: While salaries or bonuses often suffice for new hires, existing employees who sign new restrictions need additional consideration (e.g., promotions, lump-sum payments). Without new consideration, the covenant’s enforceability is at risk. Clear enumeration of any raise, promotion, or bonus as part of signing a restrictive covenant can ward off legal challenges.
• Align Policies, Handbooks, and Contracts: If the employer issues a handbook or sets policies, ensure their terms do not conflict with the contract. Contradictions or promises in handbooks can inadvertently undermine an at-will statement or create implied contractual obligations. Clear disclaimers emphasizing at-will status, accompanied by consistent language, help avoid confusion.
• Address Future Amendments: Over time, job duties or the business environment may change. Therefore, some contracts include a clause specifying that amendments must be in writing and acknowledged by both parties. This can stave off disputes arising from informal promises or ad hoc updates. Such a provision helps ensure modifications remain unambiguous.
• Confirm Compliance with Statutory Protections: Pennsylvania employers routinely reference federal wage standards, equal employment opportunity requirements, and Pennsylvania labor laws in their contracts. This acknowledgment reduces the risk an employee will later argue ignorance of statutory rights. Likewise, it clarifies that the contract does not override minimum protections guaranteed by law.
• Acknowledge Local Variations: Larger Pennsylvania employers operating in multiple cities might need to address local rules on paid leave, scheduling, or other mandates. The contract can specify that if multiple jurisdictions’ laws impose conflicting requirements, the employer will comply with whichever law provides the higher standard of protection. This approach signals awareness of varying local obligations.

Avoiding Common Pitfalls 

To protect both employers and employees against misunderstandings or legal entanglements, it can be helpful to remain aware of typical pitfalls:

• Overly Broad Restrictive Covenants: Sweeping non-compete or non-solicitation provisions lacking distinct boundaries risk invalidation. Specifying precise durations and geographic limits, as well as defining the legitimate interests at stake (client lists, trade secrets, specialized training), helps bolster enforceability.
• Inconsistent Statements in Handbooks and Contracts: Stating “employment is at-will” in a contract, yet specifying guaranteed processes or indefinite commitments in a handbook, sets the stage for an implied-contract claim. Including disclaimers clarifying that the handbook is not a contract is a common practice to reduce this risk.
• Neglecting WPCL Obligations: Failing to state clearly when commissions, bonuses, and wages are considered earned, or introducing ambiguous triggers for payment, can expose the employer to liability under the WPCL. Employees, too, should ensure they understand when their right to compensation arises. Binding clarity reduces the chance of drawn-out disagreements.
• Omitting or Overreaching in Confidentiality Terms: Employers seeking comprehensive confidentiality should ensure provisions do not impede protected employee activity under the NLRA or infringe on the employee’s right to discuss conditions of employment. Striking a balance between protecting true trade secrets and respecting legally protected speech is essential.
• Delaying the Signing of Restrictive Covenants: If an employer waits until after an employee’s start date to introduce major restrictions—especially non-competes—without offering additional consideration, Pennsylvania courts will likely invalidate the covenant. Integrating these clauses at the beginning of employment or coupling them with a clear, concrete benefit later is more prudent.

If you have questions about avoiding common employment contract pitfalls or resolving workplace disputes, a Scranton, Pennsylvania attorney can provide valuable guidance.

Practical Importance of Comprehensive Agreements 

A meticulously drafted employment contract can mitigate risk and foster a stable working environment. Employees are less likely to feel insecure about job responsibilities or compensation when the contract carefully sets forth the role, essential duties, and salary structure. Employers benefit by limiting surprises related to benefits, termination conditions, or trade-secret protection. Both sides stand to avoid litigation by accurately reflecting their mutual intentions in writing.

In Pennsylvania, the contract must operate within the framework of federal and state regulations—particularly the WPCL, local benefit ordinances, and legal constraints on restrictive covenants. Including language that balances business needs against employee rights demonstrates good faith. Ultimately, Pennsylvania courts desire fairness in contract enforcement. They closely review whether the employee and employer each received something valuable, whether the restrictions or obligations are narrowly tailored, and whether the agreement respects essential public policies.

When addressing subjects like non-competes or non-solicitation terms, employers can benefit from analyzing their legitimate business interests in detail instead of automatically adopting extensive bans on future work activity. Employees, in turn, should assess whether they understand all obligations, the relevant compensation triggers, and how the contract interacts with at-will employment status. Clear communication on these points often reduces later conflict.

By observing the statutes and regulatory overlays unique to Pennsylvania, as well as broader federal protections, employment contracts can confirm the rights and responsibilities of each party. Thorough drafting, acknowledgment of relevant labor laws, careful consideration for claims under the WPCL, and mindful structuring of restrictive covenants serve as the cornerstone of a reliable agreement that stands up in court if challenged. This combination of clarity, reasonable provisions, and compliance with statutory requirements promotes a stable employment relationship that benefits both sides over the long term.

Assistance With Legal Issues in the Workplace

Workplace legal challenges can be stressful, particularly if you’re unsure of your rights and obligations. Whether you’re dealing with a potential breach of contract or navigating compensation disputes, it helps to have knowledgeable attorneys by your side. Polishan Solfanelli’s Scranton, Pennsylvania lawyers assist clients with a range of employment issues, from understanding non-compete clauses to pursuing remedies under Pennsylvania’s Wage Payment and Collection Law. By clarifying obligations and advocating for fair treatment, we strive to support productive employer-employee relationships. Our team is prepared to discuss how state and federal laws intersect with your specific circumstances and what avenues might exist for resolution. Whether you need to ensure a clear, enforceable contract in a new role or protect your interests if problems have arisen, we stand ready to help. To learn more about how we can address your workplace concerns, call 570-562-4520 and take the first step toward protecting your rights.