Is Your Non-Compete Agreement Subject to Blue-Penciling?

Is Your Non-Compete Agreement Subject to Blue-Penciling?

Blue penciling is a term in the non-compete arena that indicates that a court or judge can modify a non-compete agreement to make it reasonable where it is otherwise unreasonable as it applies to an employee.  Many states allow judges, such as Michigan for instance in a non-compete matter, to blue pencil or re-write an otherwise unreasonable non-compete agreement to make it a reasonable non-compete agreement.  There are other states, such as New York, that do not generally blue pencil a non-compete agreement and simply invalidate the agreement should it find that the terms of the non-compete agreement are unreasonable.  It is important to know the limits of a court in assessing your non-compete agreement.

For instance, if you are subject to a blatantly unreasonable non-compete agreement and live in a jurisdiction or are subject to a jurisdiction that does not blue pencil non-compete agreements, this may actually benefit you as an employee.  If a court is not allowed to blue pencil a non-compete agreement and it is blatantly or apparently unreasonable in its application to you as the employee, it may simply be subject to invalidation by the court rather than modification to make it reasonable under the circumstances.  The converse is also true in that if you are subject to a jurisdiction where the courts have authority to blue pencil a non-compete agreement to make the non-compete agreement more reasonable, you may incur a greater risk by being subject to your non-compete restrictions to some degree if the court has the latitude or prerogative to modify or blue pencil the non-compete agreement so that it is fair and reasonable under the prevailing circumstances in the case.

Is your non-compete subject to blue pencil?  The attorneys at Traverse Legal can advise you on whether  your non-compete agreement is subject to blue pencil, as well as provide you with an analysis of the strengths and/or weaknesses of a non-compete agreement.