Updated March 01, 2024
An Arizona non-compete agreement allows for the restriction of an employee working in a specific industry to perform the same work for another company. The main restrictions are the terms cannot be written too broadly and for an unreasonable amount of time.
The courts allow for more leniency. The courts apply stricter rules for the sale of a business due to the limited amount of “time and space.”[1]
LAWS |
Legally Enforceable?
Yes, non-competes are legally enforceable in Arizona, although there are some occupational exceptions, such as:
- Attorneys. Law firms cannot prohibit an attorney from seeking other employment, although, the law firm is able to include a financial penalty if a lawyer violates a non-compete;[2]
- Broadcast employees. No broadcast employer may restrict an employee of a television station/network, radio station/network;[3]
- Physicians. Licensed physicians are not explicitly prohibited but to be “closely scrutinized” and the “doctor-patient relationship is special and entitled to unique protection.”[4]
There needs to be “some legitimate interest beyond the employer’s desire to protect itself from competition.”[5]
Reasonable Test
Determining whether a non-compete is “reasonable” depends if the restraint is not:
- Beyond that reasonably necessary for the protection of the employer’s business;
- Unreasonably restrictive upon the rights of the employee; and
- In contravention of public policy.[6]
Continued Employment
Maximum Term
There is no Arizona statute for a maximum term under a non-compete.Three (3) years have been deemed “reasonable” for a physician[8] but not for employment where no “special training or education is required”.[9] Therefore, for jobs that require no professional license, two (2) years or less is recommended.[10]
Although, ten (10) years were allowed for the sale of a business and restricting the seller from entering the same industry within a 100-mile radius.[11]
Sources
- Gann v. Morris (1979)
- William D. Fearnow v Ridenour, Swenson, Cleere & Evans, P.C. 138 P.3d 723 (2006)
- ARS § 23-494
- Valley Med. Specialists, 982 F.2d at 1283 (1999)
- Valley Med. Specialists, 982 P.2d at 1281 (1999)
- Olliver/Pilcher Insurance v. Daniels (1985)
- Mattison v. Johnston (1986)
- Valley Med. Specialists, 982 P.2d at 1281 (1999)
- Liss v. Exel Transp. Servs. (2007)
- Amex Distributing Co. v. Mascari (1986)
- Gann v. Morris (1979)
- Olliver/Pilcher Insurance v. Daniels (1985)
- Valley Med. Specialists, 982 P.2d at 1281 (1999)