Delaware Chancery Court Strikes Down Employee Restrictive Covenants in a Partnership Agreement

Restrictive provisions in employment contracts have been getting a lot of attention of late, with two January 2023 developments: the FTC’s release of a proposed rule that would severely restrict the use of non‑compete clauses, and the Delaware Chancery Court decision in Ainslie v. Cantor Fitzgerald, L.P. Ainslie is a cautionary tale for employers that might believe Delaware’s general pro-business slant makes it a friendly environment for the enforcement of non-competes and other restrictive covenants – including those imposed on employees via partnership agreements. In this guest article, Friedman Kaplan attorneys Lance J. Gotko, Asaf Reindel and Yaara Shchori Ben-Harush discuss the case’s key holdings and offer practical considerations around use of restrictive covenants. For more on the FTC’s proposed rule, see “What Employers Should Know About the FTC’s Proposed Ban on Non-Compete Provisions” (Mar. 8, 2023).

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