At least five enterprise clients followed her to a competitor within two months
A former senior sales leader leaves for a direct competitor. Five high-value clients follow within two months. And a set of restrictive covenants that a lower court threw out? Back in play.
On March 19, 2026, the Delaware Supreme Court reversed a Court of Chancery decision that had dismissed Payscale's claims against its former Senior Director of Sales, Erin Norman, and her new employer, BetterComp, Inc. The ruling in Payscale Inc. v. Erin Norman and BetterComp, Inc. (No. 297, 2025) did not settle whether the covenants are ultimately enforceable — but it made clear that the lower court moved too fast in shutting the case down before the facts could be fully developed.
Here is what happened.
Norman spent years at Payscale, a compensation data and software company. She oversaw sales across the western United States and regularly collaborated with the Chief Revenue Officer and other senior leaders on company-wide strategy. She had access to confidential customer-pricing models, financial reports, and was involved in operations that stretched well beyond her region.
In exchange for agreeing to restrictive covenants — a nationwide, eighteen-month non-compete, a non-solicitation clause, and a confidentiality provision — Norman received 175,000 Profit Interest Units through two incentive equity agreements with Payscale's holding company.
She resigned voluntarily in December 2023. About ten months later, Payscale discovered she had joined BetterComp, a direct competitor. What came next caught the company's attention: at least five Enterprise customers left Payscale for BetterComp shortly after Norman's arrival. Payscale also noted that roughly one-third of BetterComp's workforce at the time consisted of former Payscale employees.
The lower court had found the non-compete too broad to enforce, called the equity consideration "vanishingly small," and dismissed the non-solicitation and confidentiality allegations as lacking substance. The Supreme Court saw it differently.
On the question of geographic scope, the court pointed to Payscale's nationwide operations, Norman's cross-regional responsibilities, and the fact that Enterprise contracts typically run three years — making the eighteen-month restriction half that length. On consideration, the court drew an important line: for purposes of forming a valid contract, what matters is that something was exchanged at the time of signing — not whether it had significant cash value at that moment. The Profit Interest Units, worth $0 at issuance but potentially valuable upon a future sale, cleared that bar.
As for the client losses, the court found them meaningful. The departure of several Enterprise customers within two months, paired with the pattern of competitive recruiting, amounted to more than bare speculation. At this stage of the proceedings, Payscale did not need to prove its case — it only needed to show that its claims were reasonably conceivable. The court concluded it had done so.
No final determination has been made on whether any of the covenants will ultimately be enforced. The case now returns to the lower court for further proceedings with a fuller factual record.
But the signal to HR leaders is hard to miss. Equity-linked restrictive covenants — even those tied to units with no immediate cash value — are not dead on arrival. Nationwide non-competes can survive early legal challenges when backed by specific facts about an employee's seniority, access, and cross-regional reach. And when clients start walking out the door shortly after a key hire lands at a competitor, courts may be willing to let those claims see the light of day.
