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Arkansas Non-Compete Agreement Template

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Arkansas Non-Compete Agreement Template

Updated January 18, 2023

An Arkansas non-compete agreement restricts an individual’s ability to work in a specific field or industry. This is common when an employer hires an individual and shares proprietary information. The non-compete protects the business from an employee being hired by a competitor and using their learned trade secrets against them.

Legally Enforceable?

Yes, as long as the non-compete includes is it ancillary to an employment agreement to the extent that:

  • The employer has a “protectable business interest”; and
  • It is limited to “time and scope in a manner that is not greater than necessary to protect the business.”

Source: Ark. Code § 4-75-101(a)

Protectable Business Interest

A protectable business interest includes the employer’s:

  • Trade secrets;
  • Intellectual property;
  • Customer lists;
  • Goodwill with customers;
  • Knowledge of his or her business practices;
  • Methods;
  • Profit margins;
  • Costs;
  • Other confidential business information that is confidential, proprietary, and increases in value from not being known by a competitor;
  • Training and education of the employer’s employees; and
  • Other valuable employer data that the employer has provided to an employee that an employer would reasonably seek to protect or safeguard from a competitor in the interest of fairness.

Source: Ark. Code § 4-75-101(b)

Continued Employment

Arkansas recognizes continued employment as sufficient consideration for a non-compete covenant.

Source: Ark. Code § 4-75-101(g)

Maximum Term

Two (2) years is presumed to be a maximum reasonable time period after employment termination unless, “the facts and circumstances of a particular case clearly demonstrate that two (2) years is unreasonable compared to the employer’s protectable business interest.” (Ark. Code § 4-75-101(d))

In addition to the duration, a geographical area is recommended to be specified but is not required. (Ark. Code § 4-75-101(c))

Blue Penciling

Arkansas law does allow a court to reform an otherwise unreasonable to the extent necessary to:

  • Cause the limitations contained in the covenant not to compete agreement to be reasonable; and
  • Impose a restraint that is not greater than necessary to protect the protectable business interest.

Source: (§ 4-75-101(f)(1))

Although, the courts have stated that if the non-compete is too far-reaching that:

“our rule is that when a restriction such as this one is too far-reaching to be valid, the court will not make a new contract for the parties by reducing the restriction to a shorter time or to a smaller area.”

Source: Rector-Phillips-Morse, Inc. v. Vroman (1973)

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