Introduction Employers in Maryland and Washington, D.C. face complex legal challenges. This guide explains key employment law concepts and how businesses can protect themselves. Too Broad to Enforce? How Courts “Blue Pencil” Restrictive Covenants By: Ari Lichterman, Esq. Employers rely on restrictive covenants to protect their legitimate business interests, such as confidential information and client relationships. But what happens when these restrictions go too far? Do employers lose all protection afforded by their restrictive covenants? The short answer is: maybe. Under Maryland law, a restrictive covenant must be limited in scope and duration to what is reasonably necessary to protect a legitimate business interest, and it must not impose an undue hardship on the employee or violate public policy. When a covenant is too broad, a court may deem it unenforceable. That does not mean, however, that the entire agreement automatically falls. In certain circumstances, a court may salvage the enforceable portions. That is where the “blue pencil doctrine” comes into play. The term “blue penciling” traces back to the editorial practice of revising manuscripts with a blue lead pencil. In the restrictive covenant context, it refers to a court’s ability to excise offending words or clauses—crossing them out, so to speak—while leaving the remainder of the provision intact. Although today’s edits are made with digital redlines rather than blue pencils, the concept remains the same: deleting the problematic language. Maryland courts, however, treat blue penciling as a narrow remedy and, in many cases, will not employ it, choosing instead to deem the entire agreement invalid. A court only will apply the blue pencil doctrine if a clause is neatly severable, meaning there is a simple way to remove the problematic language without rewriting the entire agreement. In other words, courts may delete language they do not like, but they will not add language to make the contract acceptable. If the provision can stand on its own once the problematic language is removed, blue penciling may be appropriate. If not, the entire covenant may fail. Courts even limit the use of their discretion to remove offending language. For example, courts will not remove “dominant” language from a single, indivisible promise. Where a covenant contains two distinct, divisible promises—and one is overbroad—a court may strike the offending promise and enforce the other. But where the language forms one integrated restraint, a court will not reconstruct it, even if doing so would produce a narrower and reasonable covenant. Consider this example. An employer needs to expand its team to support a rapidly growing client base. As a savvy business owner, the employer wants to protect the company’s hard-earned client relationships from potential misuse. To safeguard the business, the employer requires its new hire to sign a restrictive covenant agreement designed to prevent an employee from gaining an unfair competitive advantage by using her relationship with the company’s clients, confidential information, or goodwill for her own benefit. The restrictive covenant agreement provides: For a period of eighteen months after termination of Employee’s employment with Employer, Employee agrees and covenants not to directly or indirectly engage in, or be employed by any business that is engaging in, any aspect of Employer’s business for which Employee performed services or about which Employee obtained Confidential Information during the two (2) years preceding termination, within a radius of fifty (50) miles from Employer’s business. This is the restrictive covenant the court examined in Aerotek, Inc. v. Obercian, 377 F. Supp. 3d 539 (D. Md. 2019), and it provides a clear illustration of when and how a court will apply the blue pencil doctrine. The court determined that this provision contained two divisible promises. The first prohibited the employee from directly or indirectly engaging in the same type of work she performed for her former employer. The second—introduced by the disjunctive “or” (and marked here in bold)—prohibited her from being employed by any business engaging in that type of work, regardless of her role. Because these promises were separated by the disjunctive “or,” and were not reliant on or illustrative of each other, the court found them to be independent promises and therefore divisible. The court blue penciled the offending language—“or be employed by any business that is engaging in”—and enforced the remainder of the provision. After excision, the remaining non-compete effectively prohibited the employee only from directly or indirectly engaging in the same type of work she had performed or about which she had acquired confidential information during the preceding two years, within the defined geographic area. In that narrowed form, the restriction was reasonably necessary to protect the employer’s legitimate business interests and did not impose an undue hardship on the employee. Of course, if the provision had been drafted more narrowly, then even the offending language might have withstood judicial scrutiny. For example, the court likely would have found the following clause to be reasonable: “or be employed in the same capacity by any business engaging in” a similar business. Takeaways for Employers Because Maryland courts apply the blue pencil doctrine sparingly, employers should not assume a court will simply delete an overbroad provision and enforce the rest. Courts will not rewrite an overreaching covenant to make it reasonable; they only will strike language that is cleanly severable. If the offending language cannot be excised neatly, the entire covenant may be invalidated. Employers therefore should draft restrictive covenants with the following principles in mind: Draft with precision. Tailor restraints to the employee’s actual job duties, clearly defined customer relationships, and reasonable geographic and temporal limits. Structure provisions to be severable. When possible, separate restrictions into distinct, independent promises so that if one portion is deemed overbroad, the remainder can stand on its own. Above all, remember that overbroad language can doom an entire agreement. Courts will not rescue an employer from an indivisible, overly aggressive restraint. The attorneys at Luchansky Law are experienced in drafting enforceable restrictive covenants tailored to protect your business interests while minimizing legal risk. 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