Friday, January 18, 2008

What about pensions and working for a competitor?

Sometimes a question comes up whether an former employee can lose his pension if he or she goes to work for a competitor. There seem to have been some cases like this with insurance agents. There was a case Bilec et al. v. Auburn & Associates, Inc. et al., 588 A. 2d 538 (Pa. Super. 1991) where an agent had agreed to a non-competition pension forfeiture clause. However, the former employer apparently terminated business, and an eventual appeals court rulingfound the non-competition clause violated "public policy" in Pennsylvania.

There have been a few news stories like this over the years, but relatively little shows up on the issue with search engines. It seems that there may be a bigger issue where the pension was based on some sort of matched contribution program than a flat pension. It seems that with most cases of straightforward employment, this does not become a problem.

When a person goes back to work for the same employer (or an employer who bought the company) it may be a different matter. The pension may be stopped, and in some cases the person going back to work should make sure that his compensation package, however it is structured, takes this into consideration. If the employer needs his skills because of their specificity, the employee might have the upper hand in negotiating.

If a visitor knows of some more specific cases, I would appreciate detailed comments.

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