- posted: Oct. 15, 2025
Throughout the country, many people work for companies that are headquartered in other states. This can become a factor in cases where a former employer tries to enforce a noncompete agreement. Usually, these contracts have provisions setting forth which state’s law should apply. Businesses and workers should pay close attention to this language, as enforcement of restrictive covenants vary widely depending on the jurisdiction. Here in Florida, the recently-enacted CHOICE Act is generally seen as being favorable to businesses.
The U.S. Court of Appeals for the First Circuit dealt with a choice-of-law question pertaining to a noncompete agreement in DraftKings Inc. v. Hermalyn. Henry Hermalyn was a New Jersey resident who worked for Massachusetts-based DraftKings, one of the major players in the online sports-betting industry. His noncompete agreement restricted him from working for a rival company within one year of his departure. This provision was drafted in line with Massachusetts law, and Hermalyn assented to it when he took the job.
Subsequently, Hermalyn left DraftKings to take a job with an emerging online gaming competitor, Fanatics Sportsbook. This position required him to move to California, where the Fanatics is located. Upon notice of this, DraftKings sued Hermalyn seeking to enforce the noncompete agreement. He argued that as a California resident, he should be subject to California law, which generally prohibits noncompete clauses.
DraftKings noted that the document signed by Hermalyn included language stating that enforcement of the agreement would be governed by Massachusetts law. As a result, a preliminary injunction was issued preventing Hermalyn from working on issues related to DraftKings’ areas of operation for 12 months.
On appeal, Hermalyn argued that California has a strong public interest in preventing its residents from being restricted in their careers by former employers. Though he cited a case where a Massachusetts court held that California’s noncompete law should apply, the First Circuit rejected its application because the employee in the other case worked in California for a Massachusetts company. On the other hand, Hermalyn typically worked in New York and New Jersey, but made dozens of trips to DraftKings’ Massachusetts office. There was no reason why DraftKings would ever have reason to believe California law was invoked. Accordingly, the panel rejected Hermalyn’s appeal and upheld enforcement of the Massachusetts noncompete agreement.
For employers, this ruling underscores the critical importance of carefully crafting noncompete agreements with comprehensive choice-of-law clauses to preempt potential jurisdictional conflicts. Businesses may feel more assured in enforcing noncompete clauses if their agreements clearly articulate applicable state laws, regardless of where the employee might relocate. Employees should thoroughly review all contractual terms, especially when planning to move to a state with different legal perspectives on noncompetes.
H. Clay Parker, Esq. The Florida Lawyer advises companies and individuals on concerns relating to the formation and enforcement of employee noncompete agreements. To schedule a consultation, please call [ln::phone] or contact us online. Our office is in Orlando.
