For a remote workforce distributed across state lines, the practical challenge is no longer determining whether a noncompete is reasonable; it is also deciding which state gets to answer that question.
The U.S. Bureau of Labor Statistics (BLS) recently reported that approximately 22.6% of the total U.S. labor force now works remotely. Half of the remote employees work in technology, finance or the professional services industry, with advanced degree holders representing approximately two out of five remote workers.
Remote work has turned a once-reasonable limit on competitive business practices into a national choice-of-law problem, forcing employers and employees to ask which state's rules should govern a restrictive employment covenant.
Before remote work became popular, noncompete agreements usually centered on familiar, concrete facts: where the employer operated, where the employee worked, which customers the employee served and whether the restriction was reasonable in time and territory. Today, those facts are harder to pin down.
A software engineer may live in California, report to managers in Massachusetts, serve customers in New York and sign an agreement selecting Delaware law. A sales executive may work from home outside a restricted territory while maintaining relationships with customers inside it. These arrangements have made noncompete agreements more difficult to draft, enforce and challenge.
Nationwide, the legal landscape is becoming increasingly...
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