Employment contracts are designed to protect both employers and employees by outlining the rights of both sides as employment begins. An employment contract will lay out the expectations for both sides during the course of employment. The contract will also set guidelines for what happens when an employee leaves via resignation, termination, or layoff.
A common inclusion in many employment contracts is a non-compete agreement. Since a non-compete agreement can have significant ramifications for an employee leaving the company, employees need to know what their rights are and when non-competes are enforceable.
What is a Non-Compete Agreement?
Non-compete agreements are often included in employment contracts to protect the interests of a business. Through a non-compete agreement, an employee can be restricted from taking their expertise gained through an employer to a competing company. These agreements are also designed to protect confidential information and trade secrets, while also barring employees from taking customers and clients with them out the door.
To be legally valid, an Arizona non-compete agreement has to meet certain requirements. Courts in Arizona are not fond of non-compete clauses that are overly restrictive or one-sided. A non-compete agreement must:
- Be reasonable to both sides: the agreement can protect legitimate business interests, but it cannot set overly burdensome limits on an employee’s ability to continue their career after leaving.
- Include consideration: “Consideration” is a legal term meaning each side of a contract must gain something from the agreement. In exchange for giving up certain freedoms through a non-compete clause, the employee must receive some form of benefit in return. When signing a non-compete agreement, employees should be careful to make sure they gain something meaningful in return, such as bonuses or other financial incentives.
- Be for a limited period of time: the agreement can’t prevent an employee from working for competitors indefinitely. Courts have found non-compete time periods of several months up to one year to be enforceable. Anything longer than that could be viewed as unduly restrictive.
- Have a limited geographic scope: barring an employee from joining another company within a 15-mile radius from Phoenix, AZ for up to a year might be seen as reasonable by a court reviewing the agreement. Non-compete agreements with limitless geographic scope (such as the entire state of Arizona) are generally not enforceable.
- Serve a legitimate business interest: a company relying on valuable trade secrets or intellectual property has a right to protect that information through employment contracts and non-compete agreements. A non-compete agreement that is overly broad and not tied to some realistic business interest might be less enforceable.
- Be disclosed to the employee upon hiring or promotion: the company must provide a full and fair disclosure of the non-compete terms whenever they are introduced. Employees should consult with an employment lawyer before signing a non-compete agreement to make sure their interests are protected.
Employers and employees alike should ensure that the terms of the agreement are fair and clearly disclosed. If you’re asked to sign a non-compete, consulting with an experienced employment lawyer can help safeguard your rights and ensure the agreement is enforceable and balanced.
Are Non-Compete Agreements Enforceable in Arizona?
As long as all of the requirements listed above are met, a non-compete agreement will generally be enforceable in Arizona. A non-compete agreement must be fair in terms of time limits and territory limits. The agreement must also be tailored to the employee’s job function and the potential for harming the company if they left without any non-compete restrictions.
Because of the impacts non-compete agreements can have on an employee’s ability to earn a living and maintain their livelihood, courts will scrutinize the terms carefully. If your employment contract has terms that are unfair, overly broad or were not properly negotiated with you, there is a chance the non-compete clause could be found unenforceable. An experienced Phoenix employment lawyer can review your contract and advise you of your legal options.
Contact a Phoenix Employment Lawyer Today to Schedule a Consultation
Whether you are starting employment or are leaving an employer, you need to know your legal rights when it comes to non-compete agreements. Signing a non-compete agreement can have significant consequences for you – even affecting your ability to continue your career in Phoenix, Arizona, after leaving an employer. A dedicated Phoenix employment lawyer with Houk Employment Attorneys can review the terms of a non-compete clause to make sure it is fair to you. Contact our law office today to learn more and schedule your consultation.
Contact the Phoenix Employment Attorneys at Houk Employment Attorneys Today For Help With Your Case
For more information, please contact an experienced employment attorneys at Houk Employment Attorneys to schedule an initial consultation today. Our employment law firm is conveniently located near you. We have an office in Phoenix, AZ.
Houk Employment Attorneys
1850 N Central Ave Suite 2010, Phoenix, AZ 85004
(480) 569-2377
