The Delaware Court of Chancery has refused to enforce a non-compete agreement used by HKA, finding the restriction overbroad. The decision hands a defeat to the firm and adds another data point to a string of Delaware rulings that rein in restrictive covenants drafted too aggressively.

For HR leaders, the ruling touches a familiar set of people-process decisions: how restrictive covenants are drafted at hire, who reviews them, and whether existing templates would survive a challenge in the jurisdiction where enforcement would actually occur. A covenant a court refuses to enforce provides no protection at all — and litigation over an overbroad agreement can still consume management attention and legal budget.

Delaware's Chancery Court holds particular weight here because the state hosts many corporate headquarters and frequently adjudicates employment disputes for executives and firms incorporated there. Chancery judges have repeatedly emphasized that non-competes must be reasonable in scope, geography and duration, and must protect a legitimate business interest rather than simply suppress competition.

HKA's agreement failed that test. The court's finding that the covenant was overbroad signals that even sophisticated employers with significant resources to spend on legal drafting cannot count on courts to blue-pencil an excessive restriction into an enforceable one.

The ruling arrives amid a shifting enforcement environment for restrictive covenants generally. Employers have watched the Federal Trade Commission pursue a proposed ban on non-competes — a rulemaking that has since faced legal challenges — while numerous states have tightened their own statutes, with some, including California, Minnesota and North Dakota, largely barring non-competes outright. The practical consequence: a single national template for restrictive covenants no longer works, if it ever did.

That patchwork places new weight on decisions HR teams make long before any dispute reaches a courtroom.

Consider the questions the ruling raises for people-process design. Which roles genuinely warrant a non-compete, as opposed to a narrower non-solicitation or confidentiality clause? Who signs off when hiring managers request covenant coverage for positions that may not justify it? And when an employee departs, what triggers the decision to enforce — a judgment call that now carries measurable litigation risk if the underlying agreement is overbroad?

The economics matter as well. An unenforceable non-compete can create false confidence inside the business, leading managers to believe trade secrets and client relationships are protected when a court would disagree. Discovering that gap during a departure dispute, as HKA effectively did, is the most expensive way to learn it.

HR teams responding to rulings like this typically move through several steps. They inventory existing covenants across the workforce. They tier the population — separating executives and highly sensitive technical roles from the broad middle of the organization. And they route templates through counsel licensed in the jurisdictions where employees actually work, rather than defaulting to the state of incorporation.

None of this eliminates restrictive covenants from the toolkit. Where an employee holds genuine trade secrets or client relationships, a properly scoped agreement remains defensible in many jurisdictions. The Chancery Court's message is narrower but sharper: breadth is not protection. An overbroad covenant is, in practice, no covenant at all.

Expect employers to revisit their covenant templates in the coming quarters, as courts in Delaware and state legislatures nationwide continue to test where the line falls between legitimate protection and unlawful restraint.