While the FTC’s plan to ban non-compete agreements nationwide will not be going into effect, employers should be on alert that non-compete agreements are still being approached with scrutiny, which is especially evident in Delaware courts.
Over the past two years, both federal and state courts in Delaware have found several non-compete agreements involving executives and managers in the employment and sale-of-business contexts to be unenforceable for being overbroad. These courts have even declined to modify, narrow, or delete unenforceable parts of the non-compete agreements. This recent pattern in Delaware is a departure from the state’s history of treating non-compete agreements favorably and being willing to make edits to otherwise enforceable non-competes.
Considering courts have become more reluctant to enforce non-compete agreements and the controversy surrounding the topic, employers should review their non-compete agreements to ensure they are carefully drafted. Please do not hesitate to reach out for assistance in doing so.
