Function Follows Form - Enforcement of Restrictive Covenants After Company Acquisition May Hinge on Structure of the Deal

In late 2009 and early 2010, Pennsylvania state and federal appellate courts clarified the ability of employers to assign non-competition agreements as part of a merger or sale of a company. In both cases, the court distinguished between a stock sale and an asset sale. Both courts held that non-competition agreements with employees could be assigned, even without the employee’s consent, if the change in ownership of the company is effected through a stock, rather than an asset, acquisition.