An Arizona non-compete agreement is a legal document that businesses use to protect their sensitive and proprietary information. 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.
An Arizona non-compete agreement can be a useful tool but Arizona has its own laws about what can and cannot be included in non-compete agreements. Below is everything you need to know about what is allowed in Arizona.
Is a Non-Compete Legally Enforceable in Arizona?
Yes, non-compete agreements are legally enforceable in Arizona. There are some specific rules and restrictions, but generally, most non-compete agreements are allowed.
Arizona law states that non-compete agreements should not be broader than necessary, so it is wise to keep the agreement narrow in scope if possible. Use it only to protect the data and interests that are necessary and don’t make it wide in scope. If you make your agreement more broad than necessary, it’s possible it could be challenged in court and ultimately struck down. The guidance below can help you avoid that outcome.
The following can all be protected by non-compete agreements in Arizona:
- Trade Secrets
- Confidential information
- Customer relationships
Reasonable Use and Exceptions
Below are some of the guidelines for reasonable uses for non-compete agreements in Arizona, along with some exceptions to consider.
- 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:
You should also keep in mind the following FAQs:
Enforceable when terminated without cause? – Not decided
Employee non-solicitation agreement permitted? – Yes
Customer non-solicitation agreements permitted? – Yes
Does continuing employment equal sufficient consideration? – Yes
Non-Compete Agreement Arizona Limitations
Arizona has some limitations with regard to duration and location.
Limitations on time
Arizona law does not state a specific time limitation on non-compete agreements. Rather, the law states that the agreement should be reasonable for the position and the knowledge that is being protected. While a two-year agreement could be reasonable for a high-level executive, it may not be reasonable for a lower-level worker with limited access to sensitive information. Generally, agreements should lean on the side of being as short as needed.
Non-compete Arizona 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 simply define it by industry or competitors rather than a geographic area.
Arizona Non-Compete Agreement Sample
Below, you can download a free Arizona Non-Compete Agreement template in PDF and Word format.