Phoenix Non Compete Attorney Arizona Employment Contract Lawyer Scottsdale Employment Law

The Law Office of

Joseph A. Velez

480.710.5079

Phoenix, Arizona Employment/ Labor Law Attorney

Employment Contracts/ Non-Compete Agreements

Today, more employees than ever find a promising career path blocked by an agreement that meant little to them when they signed it. In Arizona and many other states, courts will enforce agreements by employees not to compete against their former employer.

Overview. Arizona courts recognize the need for appropriate employer protection in maintaing customer relationships after an employee leaves, and will enforce legitimate agreements between an employer and an employee limiting the employee’s right to compete against the employer after employment. There are two common types of restrictive covenants. A “covenant not to compete” precludes a former employee from working in the same business as the employer’s or making use of confidential information of the former employer for a certain period of time. Anti-piracy (also called “non-solicitation” agreements) restrict the former employee from soliciting customers of his former employer or from providing services to those customers. Similar to noncompete agreements are nondisclosure agreements, which do not prevent competition per se, but prevent the former employee from disclosing or making use of confidential information or trade secret information from his previous employment.

However, only reasonable restraints will be enforced- those no broader then the employer’s legitimately protectable interests. Covenants not to compete that are overly broad or overreaching or that lack necessary consideration are not enforceable.

What is a covenant not to compete?

A covenant not to compete is a promise by an employee not to compete with his or her employer for a specified time in a particular place. A covenant nit ti compete, which is also known as a non-compete agreement, may be a clause in an employment agreement or a separate contract standing by itself.

Are they enforceable?

Generally speaking, yes. Courts have traditionally frowned upon restrictions placed by employers on their employees’ rights to find and make a living. However, courts will enforce non-competition agreements if:

-The employer proves that it has a legitimate business interest to protect by restricting its employees’ rights to compete against it.
-The restrictions on the employee’s right to compete is no greater than that necessary to protect the employer’s business interest

For the most part Arizona follows the reasonable requirement test. An employer must have a protectable interest to be enforced by the covenant beyond the employer’s desire to protect itself from competition. What is reasonable depends on the whole subject matter of the contract, the kind of character and location of the business, the purpose to be accomplished by the restriction, and circumstances which show the intention the parties. The courts seek to accommodate the right to work, the right to contract and the public’s right to competition. An employer may not enforce a post-employment restrictive covenant simply to eliminate competition per se. The legitimate purpose of post-employment restraints is to prevent competitive use, for a time, of information or relationships which pertain peculiarly to the employer and which the employee acquired in the course of the employment.

The guideline most often quoted provides that a covenant is reasonable to protect the employer’’s interest in maintaining customer relationships after an employee leaves for only as long as may be necessary to replace the employee and give the replacement a chance to show customers that he or she can do her job.

Consideration for covenant. An employer must give consideration in exchange for a covenant not to compete. An ongoing question is whether continued employment alone constitutes consideration in exchange for a covenant not to compete.

Geographical and Temporal Limitations. In assessing whether a restrictive covenant is reasonable, the courts routinely scrutinize the geographical and temporal limitations in such covenants.

Actual Harm. In order to recover damages, proof of actual harm, even though difficult to establish, is required.

Employment contracts and non-competes can be easily misunderstood often favoring the employer. Please contact The Law Office of Joseph Velez to discuss any employment contract or non-compete issues.

Our law office represents clients throughout the Phoenix, Arizona area including the cities of Scottsdale, Maricopa, Mesa, Surprise, Paradise Valley, Avondale, Gilbert, Chandler, Glendale, Florence, New River, Fountain Hills, Peoria, Surprise, Queen Creek, Tempe, Sun City, Apache Junction, and Casa Grande. We serve the counties of Maricopa, Yavapai, Gila, Pinal, La Paz, Yuma, and Pima County.

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