Restrictive covenant enforceability varies enormously by state, which makes the choice of law provision one of the most contested clauses in an employment agreement.

The general approach. Courts enforce a chosen law where the chosen state has a substantial relationship to the parties or transaction and the choice does not offend a fundamental public policy of a state with a materially greater interest whose law would otherwise apply.

Fundamental public policy is where employee-side arguments succeed. Several states have declared their restrictions on non-competes to be fundamental policy, and some have enacted statutes voiding choice of law and forum clauses in employment agreements with resident employees.

The race to the courthouse. Because the answer depends on which court hears it, both sides file quickly — the employer in the chosen forum seeking enforcement, the employee at home seeking a declaration of unenforceability. The first-filed rule, anticipatory filing exceptions and the balance of convenience then determine which case proceeds.

Forum selection clauses are given substantial effect but face the same statutory limits in employee-protective states.

Practical drafting. For a multi-state workforce, state-specific addenda reflecting each jurisdiction’s requirements are more effective than a single clause selecting a favorable state, which may fail exactly where it is needed.