On July 23, 2026, the North Carolina Business Court delivered a pointed reminder to employers about the limits of restrictive covenants when it refused to enforce a non-competition clause used by an autism-therapy company against two of its former leaders. The court described the clause as facially overbroad and held it unenforceable as written, declining to salvage the provision through judicial modification. For employers who rely on non-competes to protect client relationships, proprietary methods, and workforce stability, the ruling is a significant marker of the direction courts are heading.
The decision reinforces a principle that has been gaining momentum in courtrooms across the country: non-compete provisions that sweep too broadly in scope, duration, or geography will not survive meaningful judicial review. Rather than treating restrictive covenants as boilerplate, courts increasingly expect employers to demonstrate that each restriction is carefully calibrated to a legitimate business interest, such as protecting confidential information, safeguarding customer goodwill, or preserving investments in specialized training. Provisions that go further, whether by covering geographic areas where the employer does not operate or by restricting activities unrelated to the employee's actual role, are increasingly vulnerable to being struck down in their entirety.
This ruling also contributes to a broader wave of state-level pushback against expansive employer non-compete drafting. As legislatures and courts continue to sharpen their focus on the enforceability of these agreements, employers nationwide should treat this moment as an opportunity to audit their existing templates and existing agreements. Overly ambitious language that once seemed protective may now expose an employer to the greater risk of having no enforceable restriction at all.
Practical steps include reviewing the scope of restricted activities, tightening geographic boundaries to reflect actual business operations, ensuring durations are reasonable, and confirming that each covenant is tied to an identifiable, legitimate interest. Employers should also consider whether narrower tools, such as confidentiality agreements and non-solicitation clauses, may accomplish the same protective goals with greater resilience under judicial scrutiny.
This article is intended for general informational purposes only and does not constitute legal advice. Employers should consult qualified counsel for guidance tailored to their specific circumstances and jurisdiction.