A number of Delaware courts have recently refused to modify "overbroad" noncompete agreements, opting to strike them entirely, according to a Jan. 13 viewpoint published by Christina Solomon of the law firm Foley & Lardner in The National Law Review.
"As a practical matter, this means that, in order for a noncompete to be enforceable under Delaware law (the chosen law for many business disputes for companies outside of Delaware)," Ms. Solomon writes, "they must be narrowly drafted to be reasonable in scope and designed to protect only the employer's legitimate business interests."
Ms. Solomon specifically cites the outcome of a recent case in the state's Supreme Court, in which a plaintiff sought to enforce a noncompete against one of its former founders who went to work for a competitor. The noncompete was determined to be overly broad in that it prohibited the former founder and his affiliates from engaging in door-to-door sales in the market where the former employer operated and planned to operate in the future.
The court also found the noncompete's duration unreasonable, as certain provisions of the contract created the possibility of a potentially indefinite noncompete.
A lower court declined to modify the noncompete to make it enforceable, and the Delaware Supreme Court upheld the lower court's ruling. The court specifically declined to modify the restriction because it would result in employers being "less incentivized to craft reasonable restrictions from the outset."
Ms. Solomon writes that, per the "drafting lessons learned" from this case, employers should give more serious consideration to their noncompete restrictions if they want them to remain enforceable.