Non-Competition Agreements in Arkansas: Are They Enforceable?

By Bryce Crawford        

Many employers today seek to protect their businesses and trade secrets through the use of Non-Competition Agreements, also known as Covenants Not to Compete.  Employees are often asked to sign such agreements as a condition of their employment or continued employment.  These agreements are often meant to limit the geography, time, skills or functions of jobs that may be held by the employee upon their departure from the employer.  Arkansas law takes a very strict view of Non-Competition Agreements.  As a result, many employers and employees are often left wondering if their Non-Competition Agreement is enforceable.  While the law does not look upon them favorably, Non-Competition Agreements may be enforceable if they meet the following criteria:

• The Agreement has a reasonable geographic scope: Non-Competition Agreements that restrict an employee from an area in which they never conducted business are unenforceable.  Similarly, Agreements that restrict an employee nationwide are also invalid.  Agreements that restrict an employee for an area of two or three counties or within a ten to twenty-five mile radius are generally enforceable.  Statewide restrictions are generally suspect.

• The Agreement has a reasonable time limit: Restrictions of one and two years are generally valid while restrictions of three years or longer are typically invalid.

• The employer has a valid business interest to protect: Non-Competition Agreements will not be enforced to protect against ordinary competition.  However, trade secrets, customer lists and confidential price information can generally be protected.  Skills, knowledge and techniques and relationships with customers present more difficult questions and are generally decided on a case-by-case basis by courts.

Arkansas courts will not re-write or interpret contracts in a way to make them valid.  Non-Competition Agreements must be valid as written in order for a court to enforce them.  If one of the three criteria above is not met, the entire Agreement will be invalidated by the court.  Therefore, it is imperative that employers and employees alike seek the advice of an attorney before drafting or entering into Non-Competition Agreements.

The attorneys at The Williams Law Group have experience dealing with Non-Competition Agreements and other employment law matters.  Just give us a call at 479-633-8421 or visit our website at www.wh-lawfirm.com to schedule a free consultation with one of our attorneys today.