Blue-Penciling in Work Contracts: What Employees Need to Know
Work contracts can be dense, intimidating, and full of legal jargon, leaving many employees in the dark about what they’re signing. One lesser-known but significant concept buried within these agreements is “blue-penciling.” While it might sound harmless, blue-penciling can have a major impact on your employment rights.
Barrett & Farahany will explain what it means, its implications for employees, and what you should do if you’re faced with a blue-penciled contract. If you ever believe your employer has conducted a case of illegal blue-penciling against you, or fear legal blue-penciling in court, our employment law attorneys can help.
What Is Blue-Penciling?
Blue-penciling, also referred to as the “blue pencil doctrine,” allows courts to modify or remove unenforceable clauses in a contract while leaving the rest of the agreement intact. Its purpose is to salvage workable terms in a contract instead of voiding the entire agreement.
In employment contracts, this often comes into play with clauses such as non-compete agreements, non-solicitation terms, or overreaching restrictions on post-employment activities.
Examples of Legal Blue-Penciling in Certain States
- Time Restrictions: If a non-compete agreement prevents you from working for competitors for five years, a court might reduce that period to a reasonable one, such as six months or a year.
- Geographic Scope: A contract that prohibits you from working anywhere in the country might be adjusted to apply only to the same city or state as your previous job.
- Unreasonable Clauses: A broadly worded clause preventing any kind of professional work in your field could be tweaked to prohibit only work directly tied to your employer’s current market.
While this practice aims to balance the interests of both employers and employees, its legality and scope vary widely depending on state laws.
State-Specific Laws on Blue-Penciling
While blue-penciling is recognized in many states, it is not universally accepted across the United States. Employees need to understand how their state treats blue-penciling, as this can directly impact the enforceability of their contracts.
States Allowing Blue-Penciling
Many states, such as Georgia and Illinois, permit courts to modify or strike out overly broad clauses to make contracts enforceable. These courts generally aim to preserve reasonable aspects of a contract while ensuring overly restrictive provisions are rendered harmless.
States Limiting Blue-Penciling
Some states, such as California and North Dakota, prohibit or severely limit the use of blue-penciling in employment contracts. For example, California has outright banned non-compete agreements (with few exceptions), meaning any attempt to enforce one would likely be struck down entirely, rather than modified.
The Importance of Divisibility
For blue-penciling to work, a clause in question must be “divisible.” This means parts of the contract can be cleanly removed or altered without affecting the meaning of the remaining terms. Courts generally won’t completely rewrite a clause; they only strike out unreasonable sections.
Federal Developments
Employees should also keep an eye on federal efforts, such as the Federal Trade Commission‘s (FTC) proposed rule to ban non-compete agreements nationwide. If ever implemented, this rule could invalidate many agreements and restrict blue-penciling’s role across the U.S.
Consequences for Employers Using Overly Broad Contracts
Blue-penciling may appear to be an employer-friendly safety net, but relying on it can backfire in significant ways. Employers who include overly broad or unenforceable clauses face legal challenges, reputational damage, and increased scrutiny from courts.
Risks for Employers
- Legal Challenges: Employees are increasingly likely to challenge restrictive clauses in court, leading to lengthy legal battles.
- Complete Invalidity: If a non-divisible clause is found invalid, courts may void the entire agreement, leaving the employer without any enforceable provisions.
- Reputational Damage: Drafting unfair or overly restrictive contracts can tarnish an employer’s reputation, making it harder to attract and retain top talent.
- Costly Litigation: Employers may incur significant legal fees when trying to defend unenforceable clauses.
- Regulatory Scrutiny: With states and federal agencies cracking down on restrictive covenants, employers face more pressure to draft fairer agreements.
For employees, understanding these risks highlights why it’s important to review contracts thoroughly. If a court deems your contract unenforceable, you may end up free of its restrictions altogether.
What to Do If You Suspect a Clause Is Unenforceable
If you believe your employment agreement includes terms that unfairly restrict you, gather supporting documentation and contact a legal professional. Acting quickly can prevent long-term career limitations.
How Barrett & Farahany Can Help
If you’re navigating the murky waters of employment agreements and blue-penciled contracts, Barrett & Farahany is here to help. With over two decades of experience advocating for employee rights, our firm knows how to hold employers accountable and ensure your rights are protected.
Why Choose Barrett & Farahany?
- Focused Experience: With a focus exclusively on employment law, we are leaders in tackling unfair contracts and restrictive clauses.
- Extensive Reach: We operate across eight states and the District of Columbia, making it easy for employees nationwide to access our services.
- Proven Track Record: Our reputation for excellence is backed by decades of success in protecting employee rights.
Don’t leave your future to chance. Contact us today for a consultation and take the first step toward leveling the playing field.
