Follow us on LinkedIn to see future News.
April 28, 2026
You do not need to look hard to see the trend of courts—including in Delaware—narrowing enforcement of non-competition agreements. In a decision favorable to employers, however, the Delaware Supreme Court recently established that non-competition and non-solicitation restrictions remain enforceable in Delaware when properly pleaded.
In Payscale Inc. v. Erin Norman and Bettercomp, Inc., the Delaware Supreme Court reversed a Chancery Court decision dismissing claims to enforce restrictive covenants against a former employee and competitor, holding that the lower court failed to give the Plaintiff’s allegations proper credit at the initial pleading stage.
The Chancery Court’s Decision to Dismiss the Claims
In October 2025, we wrote about the Chancery Court’s grant of a Motion to Dismiss concerning nationwide non-competition provisions and other restrictive covenants included in two equity interest award agreements, finding them overly broad and unenforceable. Click here to see the article.
Reversal by the Delaware Supreme Court
In a significant decision on appeal, the Delaware Supreme Court reversed the dismissal of claims arising from alleged violations of the non-competition, non-solicitation, and confidentiality obligations. The Supreme Court held that the Chancery Court failed to properly credit the Plaintiff’s allegations supporting its legitimate business interest in enforcing the non-competition restriction. Those allegations included that the Defendant was a senior sales leader, collaborated with other leaders across several geographic regions, participated in company-wide strategic decisions, and had significant access to confidential information. The Plaintiff also sufficiently alleged that it maintained a nationwide customer base and reasonably expected long‑term customer relationships that extended beyond the 18‑month restricted period.
The Supreme Court held that, at the Motion to Dismiss stage, it was “reasonably conceivable” that the non-competition restriction was enforceable as applied to the Defendant and that the Plaintiff sufficiently alleged that it had a legitimate business interest in its customer base and that the non-competition restriction was necessary to protect that interest. The Supreme Court also reversed the dismissal of the non‑solicitation and confidentiality claims, holding that the Plaintiff’s circumstantial factual allegations were sufficient to proceed to discovery.
While emphasizing that evidence developed in discovery could ultimately undermine the Plaintiff’s claims, the Supreme Court explained that the scope of the non-competition restriction was not facially unreasonable based solely on the Complaint and that the Plaintiff could not be expected to plead detailed information concerning a competitor’s practices prior to discovery.
Key Takeaways
The decision demonstrates that well-written and factually supportable restrictive covenants are still alive and well in Delaware, including that: (1) nationwide, 18-month non-competition agreements may be enforceable when they are sufficiently connected to an employer’s legitimate business and economic interests; (2) contingent equity awards are legally sufficient consideration for restrictive covenants; and (3) allegations of circumstantial facts can be enough to support claims for breach of non-solicitation and confidentiality provisions.
For employers and practitioners, the decision highlights the importance of aligning restrictive covenant provisions with clearly articulated business interests—and of pleading those interests with sufficient factual detail to survive early dismissal.
The author of this article, Andrew M. DeLucia, is a member of the Bars of Pennsylvania and New Jersey. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in Pennsylvania, New, Jersey, Delaware, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
