What is a Non-Compete Agreement in Arizona?

non-compete agreements in arizonaWhen starting a new job, you will have to sign a range of documents. The non-compete agreement could be one of the legally-binding clauses an employer will insist on. It’s also known as a covenant not to compete and it prevents the employee from practicing a similar job for a competitor of the current employer.

Non-Compete Agreement Laws in Arizona

It’s easy to see just how restrictive a non-compete clause (NCC) is going to be. It could potentially prevent a professional from enjoying an array of employment opportunities in the future. This is why a worker has to think carefully about it and they should also familiarize themselves with the legal framework in Arizona.

According to Arizona courts, such restrictive employment contract clauses can be enforced as long as the terms are just broad enough to protect the business interests of the employer (not unnecessarily restrictive).

The condition indicates that the NCC can be enforced whenever the timeframe isn’t irrationally extensive and it does come with an acceptable geographic scope. A reasonable timeframe is anything up to 12 months from the date of the employment contract termination.

Review on a case by case basis will be required since NCCs in some industries may be more restrictive and still acceptable under Arizona regulations. The information contained in the clause itself, the competitiveness of the employee and the manner in which the agreement will limit their ability to earn an income in the future will all be examined to determine whether the NCC is enforceable.

What Happens Whenever NCCs Aren’t Enforceable

A court will do a thorough examination of the NCC clauses. The timeframe, the geographic limitations and whether the clause is against public policies will all be considered. Based on this examination, the court will rule out whether the NCC is enforceable or not.

Depending on the specifics of the situation, the court could determine that either the entire NCC is unenforceable or that a particular clause is too broad.

The provisions seen as legally problematic will be removed. The rest of the NCC, however, will remain valid, as long as it has been formulated to protect the rights of the employer.

NCCs will be easy to challenge in court whenever an employer has not taken the time to review, personalize or update the clause. A generic NCC template cannot be used to create a legally-binding document in Arizona. The scope and the limitations under such a clause will almost always be declared unenforceable in court.

The best NCCs are drafted by employment attorneys and tweaked every single time an employee is asked to sign such a document. Personalized NCCs will be much more difficult to challenge because the scope of the limitations will be easier to defend in court.  Find out about the implied employment contract in Arizona.

NCC and Non-Disclosure Clauses Are Different

While many standard employment contracts may feature both NCCs and a non-disclosure agreement, these two restrictions are not one and the same thing. Understand the difference before signing anything.

A non-disclosure agreement keeps employees or former employees from sharing company information with third parties. The NCC prevents former workers from being employed by competitors. As a result, the NCC will be much more challenging because it will prevent employees from accepting a better job offer in the future.

Very often, the non-disclosure agreement will be sufficient to protect trade secrets and other vital business information. Company owners and managers should consult employment attorneys to determine the parameters of a solid employment contract. On occasions, however, preventing employees from working for the competition can also be imperative to maintain the company’s positions on the market. In such instances, personalized and reasonable NCCs that are enforceable under Arizona regulations will be of paramount importance.