Part 29 of “The Restricting Covenant Series”: From Reliable to Unpredictable: Navigating Post-Employment Restrictive Covenants in Delaware

Once considered a reliable “go-to” state for enforcing noncompetes and nonsolicitation agreements, Delaware is now a minefield of unpredictability. Historically, if a noncompete’s geographic, temporal or business activity scope was too broad, Delaware courts used the “blue-pencil” doctrine¹ to render them reasonable and enforceable. Those days are largely gone. Blue-penciling is not a reliable safety net for employers in the First State. Today, Delaware courts are more likely to strike overly broad restrictions than to rewrite them, exposing employers to competitive risks if their agreements are not precisely tailored or carefully crafted.

Something is Afoot in the First State

Delaware’s reputation as the jurisdiction of choice for business is rooted in its robust and employer-friendly corporate laws. It is a “contractarian state,” meaning its courts respect and enforce the bargains struck by parties – whether in employment, merger, stock or partnership agreements – so long as those bargains are not unconscionable or contrary to public policy. This contractarian philosophy has long offered businesses predictability and reliability, making Delaware a preferred state of incorporation.

Recently, however, Delaware courts appear to be increasingly unwilling to enforce restrictive covenants that are too broad in geography or business activity. The era of judicial “blue-penciling” – where judges modify problematic provisions to save an otherwise unenforceable agreement – appears to be at an end or at least an exception to the general rule of no blue-penciling.

Is Blue-Penciling Dead in Delaware?

Traditionally, Delaware courts used the blue-penciling doctrine to reform overbroad agreements to fit the facts and render them enforceable. Today, courts are far less inclined to intervene and “fix” problematic contractual restrictions. As one Delaware judge explained, “[w]hile this Court has, in some instances, used its discretion to blue pencil overly broad restrictive covenants, doing so creates confusion, encourages employers to overreach, and encourages litigation ‘by building a degree of uncertainty into every employment agreement.’”² Similarly, the Delaware Supreme Court recently noted that “[i]f employers know that even the most unreasonable covenants will be enforced if an employee’s conduct is sufficiently flagrant, employers will be less incentivized to craft reasonable restrictions from the outset.”³ With these views in mind, Delaware judges now often decline to enforce overbroad covenants altogether.

A prime example is Payscale Inc. v. Norman⁴, where a Delaware Chancery judge declined to blue-pencil a noncompete agreement that was broader than necessary to protect Payscale’s legitimate business interests. The agreement barred a former senior vice president of sales from working for any competitor anywhere in the United States, in nearly any role, for 18 months post-employment. The court in Payscale distinguished this situation from a “sale of business” scenario, where broader restrictions may be justified, especially when the seller receives substantial consideration. The provision Payscale tried to enforce was nationwide — effectively worldwide — and its description of restricted business lines was vague. The court declined Payscale’s request to blue-pencil the agreement, noting a lack of negotiation over the terms of the noncompete, unequal bargaining power between employer and employee, and insufficient justification for the breadth of the restrictions. The court’s decision to not blue-pencil the noncompete was fatal to Payscale’s efforts to enforce it. This decision was not an anomaly. Several similar results are on the books in Delaware recently.⁵

A Delicate Balancing Act: Employee Mobility vs. Corporate Protection of Business Interests

The shift in Delaware’s reluctance to intervene and fix overbroad restrictions to align with a company’s legitimate interests reflects a broader public policy trend throughout the United States favoring employee mobility and market competition.

Delaware judges now appear to place greater weight on an individual’s right to pursue their livelihood, particularly for lower-level employees, those with limited access to confidential information, where minimal consideration was given for the covenants, or cases lacking concrete evidence of competitive harm. These courts also heavily scrutinize the noncompete language used by the employer and pick apart any ambiguity in favor of the employees. Except in states like Florida — which recently expanded employer protections and enforcement tools for restrictive covenants under its July 2025 CHOICE Act,⁶ — Delaware’s more restrictive approach appears to be in line with recent federal guidance and policy shifts disfavoring enforcement of broad noncompete agreements.

There is no doubt that Delaware courts now, more than ever, require employers to demonstrate that noncompete restrictions are no broader than necessary and will heavily scrutinize these commonly found components within them:

• Geographic Scope. Worldwide or nationwide restrictions? Difficult to enforce, unless directly tied to the business’s legitimate interests and business market and the employee’s actual scope of work.
• Temporal Scope. Restrictions extending beyond two years? Generally disfavored, except in exceptional circumstances or in connection with a sale of business.
• Activities Restrictions. Blanket prohibitions on “working for a competitor” “in any capacity”?⁷ Unlikely to withstand scrutiny; agreements should define the business lines and competitive activities with clarity and precision.

Takeaways and Tips

Delaware’s evolving standards regarding enforcement of post-employment restrictive covenants presents both challenges and opportunities. The blue-pencil doctrine is no longer a reliable safety net or fallback for employers. Delaware courts will, however, enforce well-crafted noncompete and nonsolicits and award remedies for demonstrated violations, as reflected recently in Sorrento Therapeutics v. Mack, et al., 2025 WL 2172268 (Del. Ch. Nov. 15, 2025), where the judge awarded both injunctive and monetary relief, including partial fee-shifting, for breaches of fiduciary duty, violation of a restrictive covenant and misappropriation of trade secrets.

Employers should proactively tailor their post-employment restrictive covenants to the realities of each employee’s role and the legitimate interests at stake. Overbroad, vague or unsupported restrictions are at great risk of wholesale invalidation under Delaware law. Some practical tips to consider:

• Be Precise and Tailored. Limit noncompetes to geographic areas and customers actually relevant and related to the employee’s work.
• Do Not Mix Clauses. Keep noncompetes and nonsolicits separate in the agreement. Courts may strike one and keep the other depending on the circumstances.⁸
• Look Beyond Traditional Noncompetes. Use confidentiality and nondisclosure agreements for targeted protection. Consider “garden leave” (paying employees to stay away from competitors for a set period) or forfeiture-for-competition agreements — both viewed more favorably by Delaware courts (and many other states) than blanket noncompetition restrictions.⁹

Final thoughts: Precision is now the crux of enforceability under Delaware law. Overbroad or unsupported restrictions are at high risk of being invalidated entirely. By tailoring agreements to the realities of each employee’s role and the needs of the business, Delaware companies can continue to protect their business interests while respecting the increasing emphasis on employee mobility and fair competition.

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The Restricting Covenant Series aims to offer insights and practical pointers for navigating restrictive covenant issues. This article is not legal advice. Every situation is unique, different and depends on the governing state law. If you have a situation that needs legal guidance, talk to an attorney who knows this area well.

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FOOTNOTES

1. See Part VII of this Series, discussing various ways courts equitably modify overbroad restrictions, including blue-penciling, https://laborsphere.com/part-vii-of-the-restricting-covenant-series-blue-pencils-and-brokers/
2. Cleveland Integrity Services, LLC v. Byers, 2025 WL 658369 (Del. Ch. Feb. 28, 2025)
3. Sunder Energy, LLC v. Jackson, 332 A.3d 472 (2024).
4. 2025 WL 1622341 (Del. Ch. June 9, 2025).
5. Declining to blue-pencil overbroad restrictive covenants: Weil Holdings II, LLC v. Alexander, 2025 WL 689191 (Del. Ch. Mar. 4, 2025), affirmed, 2025 WL 2993362 (Del. Oct. 23, 2025); Cleveland Integrity Services, LLC v. Byers, 2025 WL 658369 (Del. Ch. Feb. 28, 2025); Fortiline, Inc. v. McCall, 2024 WL 4088629 (Del. Ch. Sept. 5, 2024); Hub Group, Inc. v. Knoll, 2024 WL 3453863 (Del. Ch. July 18, 2024), certif. denied, 2024 WL 3950683 (Del. Aug. 27, 2024); Sunder Energy, LLC v. Jackson, 2023 WL 8166517 (Del. Ch. Nov. 22, 2023), affirmed, 2024 WL 5052887 (Del. Dec. 10, 2024); Intertek Testing Services NA, Inc. v. Eastman, 2023 WL 2544236 (Del. Ch. Mar. 16, 2023); Kodiak Bldgs. Partners, LLC v. Adams, 2022 WL 5240507 (Del. Ch. Oct. 6, 2022). See also, https://laborsphere.com/delaware-chancery-court-declines-to-blue-pencil-overly-broad-noncompete-agreement-casts-doubt-on-choice-of-law-provisions/
6. For further details on the Florida Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act, see https://www.faegredrinker.com/en/insights/publications/2025/7/floridas-choice-act-takes-permitted-employer-protections-to-a-new-level.
7. See Part 14 of this Series, discussing noncompetes and the janitor analogy, https://laborsphere.com/part-14-of-the-restricting-covenant-series-non-competes-and-the-janitor-analogy/
8. See, e.g., Cleveland Integrity Services, Inc. v. Byers, 2025 WL 658369 (Del. Ch. Feb. 28, 2025) (concluding noncompete overbroad and unenforceable, but nonsolicit reasonable and enforceable and entering preliminary injunction to enforce it).
9. See LKQ Corp. v. Rutledge, 337 A.3d 1215 (Del. 2024); and Cantor Fitzgerald, LP v. Ainslie, 312 A.3d 674 (Del. 2024), discussing enforceability of forfeiture-for-competition provisions and the “employee choice doctrine.”

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