In a recent ruling on August 31, 2023, the Delaware Court of Chancery declared that a choice of law provision selecting Delaware in an employment agreement was “not necessarily binding.” In the same judgment, the court deemed the employment agreement’s non-compete clause unenforceable. The case in question is Centurion Service Group, LLC v. Wilensky, No. 2023-0422-MTZ and all legal professionals should be aware of the potential implications of this decision.
JDSupra reported that this is the Delaware Court of Chancery’s second decision in a week that has invalidated a non-compete clause. These rulings could impact not only Delaware corporations but also any US companies who have chosen Delaware law to govern their contracts.
Legal experts in the field of employment law have long stressed the importance of careful drafting of non-compete agreements. Too often, these agreements are written in such a way that they may be seen as overly restrictive to the employee and may not survive a legal challenge. This latest ruling provides further evidence of this fact and highlights the need for legal professionals to be aware of changing judicial attitudes toward non-compete agreements.
This new judgment may place an additional drafting burden on attorneys. When preparing employment agreements, care should be taken to ensure that systemically important provisions such as non-compete and choice of law clauses are specifically tailored so as not to overstep the bounds of what a court may consider fair and reasonable.