Despite the building legislative and judicial backlash against covenants not to compete, employers have in some cases utilized liquidated damages clauses, one-sided attorney fee shifting provisions, and provisions giving them the option not to make promised garden leave payments, to increase their power over existing employees.

Courts may, however, use their equitable powers to police any provision of a noncompetition covenant to ensure that it does not unreasonably restrict competition. Accordingly, employers should carefully consider whether including such provisions is worth the risk they pose to the enforceability of covenants not to compete.

Risky Provision #1: Liquidated Damages Clause. Liquidated damages clauses come in for special scrutiny when they are applied to covenants not to compete. Notably, the courts of Delaware, a state whose law is often chosen for employment contracts, have applied this principle.