An Arizona Non-Compete Agreement is a legal document businesses use to protect sensitive and proprietary information in Arizona. It’s an agreement that prevents former employees from using information like customer data, product designs, pricing information, and more in a new job with a competing business.
The following can all be protected by non-compete agreements in Arizona:
- Trade Secrets
- Confidential information
- Customer relationships
Reasonable Uses and Objections
- Enforceable when terminated without cause? – Not decided.
- Employee non-solicitation agreement permitted? – Yes.
- Customer non-solicitation agreements allowed? – Yes.
- Does continuing employment equal sufficient consideration? – Yes.
Legally Enforceable in Arizona?
Yes, non-compete agreements are legally enforceable in Arizona. Some rules and restrictions exist, but most non-compete agreements are generally allowed.
Arizona law states that non-compete agreements should not be broader than necessary, so it is wise to keep the contract narrow in scope if possible. Use it only to protect the essential data and interests, and don’t make it broad in scope. If you make your agreement broader than necessary, it could be challenged in court and ultimately struck down. The guidance below can help you avoid that outcome.
Reasonable Use and Exceptions
Below are some guidelines for reasonable uses for non-compete agreements in Arizona and some exceptions to consider.
Reasonable uses:
- No broader than necessary to protect the employer’s legitimate business interest
- Not unreasonably restrictive
- Not contrary to public policy
- Ancillary to another contract
Arizona has only one exception in which non-compete agreements are not allowed:
- Broadcasters
Limitations on Time
Arizona law does not state a specific time limitation on non-compete agreements. Instead, the law states that the contract should be reasonable to protect the position and knowledge. While a two-year agreement could be reasonable for a high-level executive, it may not be for a lower-level worker with limited access to sensitive information. Generally, agreements should lean on being as short as needed.
Geographical Limitations
Arizona does not have a specific statute on geographical limitations in non-compete agreements. However, Arizona does have a statute that agreements should not be more broad than necessary. In that light, you may want to keep your agreement to a small area or define it by industry or competitors rather than a geographic area.
Sample
Below, you can download a free Arizona Non-Compete Agreement template in PDF and Word format.
