The Pennsylvania Supreme Court recently ruled that an initial offer letter to an employee was not a binding agreement. The Court also validated a non-compete provision contained in an employment agreement that the employee subsequently signed even though the non-compete was not expressly referenced in the initial offer letter. InPulse Technologies, Inc. v. Notaro, the Court explained that a review of the offer letter revealed that it was part of the hiring process, and was not the employment contract. In particular, the Court focused on the following language in the offer letter: "You will also be asked to sign our employment/confidentiality agreement. We will not be able to employ you if you fail to do so," and "[i]n addition, the first day of employment you will be required to sign an Employment Agreement with definitive terms and conditions outlining the offer terms and conditions contained herein."
The Court stated that the references to future specific terms showed that, in this case, the offer letter was not a contract, but only evidence of negotiation. The Court further explained that the offer letter made clear that execution of the employment agreement was ancillary to taking employment, and because the non-compete was contained within the employment agreement, it was ancillary to Notaro's taking of employment and therefore supported by consideration. The Court's ruling makes clear that the terms and timing of the presentation of an offer letter and subsequent employment agreements must be closely examined to determine the parties' intent and their enforceability as binding contracts.