Non-solicitation and non-compete agreements are restrictive covenants between employers and their employees. When employees leave your company, these agreements are meant to dissuade them from taking your proprietary information to a nearby competitor and from using their previous work relationships to lure clients away from your business.
The wording and precision of these agreements are important because, when drafted ineffectively, these agreements can easily be rendered unenforceable by a court of law. When drafted with an experienced Phoenix non-solicitation and non-compete agreement lawyer’s counsel, however, these documents can help to protect your business interests.
Non-compete agreements prohibit departing employees from engaging in work-related activities in direct competition with their former employers. An attorney could help an employer in Phoenix enforce a non-compete agreement if all of the following are true:
- Consideration, the exchange between the employer and employee of a bargained-for benefit, is present;
- The restrictive covenant protects an employer’s legitimate business interest, such as protecting intellectual property or trade secrets;
- The agreement restricts the employee for a reasonable length of time within a limited geographic scope; and
- The agreement does not violate public policy.
Generally, consideration is present if the employer will hire the prospective employee in exchange for signing the non-compete, or if continued employment is contingent upon signing the non-compete.
Courts have wrestled with the concept of how long employees should be required to wait before looking for a new business opportunity, as well as how far they should be required to travel for work to protect a former employer’s interests. In Orca Communications Unlimited, LLC v. Noder, 233 Ariz. 411, 314 P.3d 89 (App. 2013), for example, the Arizona Court of Appeals held that a non-compete agreement between a public relations company and its former president was overbroad and unenforceable because the employer’s attempt to prohibit its former employee from providing her specialized services within an undefined restricted territory for 18 months prohibited her from pursuing any work in her field. In short, the court also found the non-compete agreement aimed to limit the former employee’s ability to use her talents elsewhere more than it aimed to protect confidential information.
Similar to non-compete agreements, non-solicitation agreements restrict departing employees’ ability to solicit clients and employees from their previous employer, and are generally enforceable so long as the terms are “reasonable.”
Each case, however, may have different parameters for what is considered reasonable. For instance, the courts may rule differently if an employee has a relationship with clients or employees who could follow the employee to a new job, as opposed to a situation where a departing employee does not have such relationships. An experienced lawyer could help businesses in Phoenix determine whether they need to use non-solicitation or non-compete agreements and what terms they need to include for the agreements to be effective and enforceable.
Contact a Phoenix Non-Solicitation and Non-Compete Agreement Attorney
No two businesses are alike, and a business should not throw together a restrictive covenant without considering its employees’ positions and access to sensitive information, as well as how to protect the business’s legitimate interests without imposing unreasonable restrictions on a departing employee.
Our attorneys have years of experience managing business matters requiring enforceable restrictive covenants. We understand why some agreements may hold up in court and others may not. If you were asked to sign a restrictive covenant, or you manage employees and want to discuss the best options for your business, a Phoenix non-solicitation and non-compete agreement lawyer can help. Schedule a consultation to learn more.