Enforceability of Noncompete Agreements By Jurisdiction

Noncompete agreements have become a routine feature of employment contracting in many jurisdictions. Each of the states has adopted a subtly different approach toward the enforcement of noncompete agreements and other restrictive covenants. Some states, like California, hold nearly all noncompete agreements to be void ab initio. Others, like Delaware, have traditionally enforced such agreements. Moreover, many states have adopted divergent standards on what constitutes a reasonable temporal and geographic scope for such restrictions, and on whether and to what extent a court may modify the terms of an overly broad noncompete agreement.

Berger Harris has made available this chart (prepared by Patrick Wooding and David Anthony) detailing noncompete enforceability by jurisdiction, for reference.  The chart provides details on both general enforceability and the present law regarding the court's ability to "blue pencil" - that is, amend the terms of an overly broad noncompete so that it falls within the Court's standards of reasonable scope. Traditionally, blue penciling was a standard feature of noncompete interpretation in most states, but in recent years some courts, like the Delaware Court of Chancery, have declined to employ blue penciling to save unreasonably broad noncompetes:

It is trite and naive to suggest that low to mid-level employees freely agree to restrictive covenants. Disparities in resources, bargaining power, and access to information undercut that overly simplistic notion—except for senior managers and top-dog executives where the shoe is on the other foot and different agency concerns arise. The employer is a repeat player with strong incentives to invest in legal services, to devise an advantageous non-compete, and to insist that employees sign. For the employer, the marginal costs of imposing a non-compete are low. See Sullivan, supra, at 1140–46. For a low-to mid-level employee, the calculus is different. When presented with a non-compete, the employee must hire a lawyer to review the document, then attempt to negotiate its terms. In a competitive environment, the employer may simply look elsewhere. Or in the optimistic days of an initial employment courtship, the employee may simply sign. Later on, if a dispute arises, the employer will be better able to fund the costs of enforcement, including litigation, and can benefit from economies of scale. The departing employee faces not only the costs of litigation, but the difficulties the non-compete creates for a new employer who could be brought into the dispute.

Delaware Elevator, Inc. v. Williams, 2011 WL 1005181, at *11 (Del. Ch. Mar. 16, 2011).