An Argument for Restricting the Blue Pencil Doctrine

Abstract

The blue pencil doctrine gives courts the authority to either (1) strike unreasonable clauses from a noncompete agreement, leaving the rest to be enforced, or (2) actually modify the agreement to reflect the terms that the parties could have--and probably should have--agreed to. 

In recent years, a number of courts refused to blue pencil noncompetition agreements. In response, some state legislatures responded by passing laws requiring courts to modify unreasonable noncompetition agreements. Legislation mandating the use of the blue pencil, even if well-intentioned, encourages employer overreach. This overreach harms employers, employees, and society as a whole.