Navigating Non-Compete Agreements: What Every Employee Needs to Know

Jordan Sprogis Blog

Non-compete agreements are a critical aspect of employment contracts in Arkansas: They govern the ability of employees to compete with their employers after leaving a job.

Because of this, understanding these agreements is vital for employees to protect their rights and future career opportunities. If you’ve been asked to sign a non-compete agreement (NCA) or recently left a job and are curious about what you’re legally allowed to share, we’ll walk through the basics.

 

Understanding Non-Compete Agreements in Arkansas

In Arkansas, a non-compete agreement restricts an employee or independent contractor from competing with the employer's business interests.

But NCAs are only enforceable if they meet certain criteria: They must be part of an enforceable employment contract, serve a legitimate business interest, and be reasonable in terms of time and scope.

 

The Arkansas courts have provided examples of what they consider "reasonable" terms in non-compete agreements. For instance, restrictions may include a 1-year limitation on an insurance agent from soliciting clients within a specific market share area or a 200-mile, 2-year restriction against an agent with access to confidential information.

Types of Non-Compete Agreements in the Workplace

NCAs come in various forms tailored to different aspects of the employer-employee relationship. These agreements serve to protect the employer's interests and prevent employees from engaging in activities that could harm the company.

Here are a few different types:

  • Time-Based Non-Competes:Time-based non-compete agreements specify a duration during which an employee is restricted from working for a competitor. For instance, an employee may be prohibited from joining a rival company for one year after leaving their current job.
  • Geographic Non-Competes: Geographic non-compete agreements restrict employees from working for competitors within a specific geographical area. This restriction can vary from as narrow as a city to as broad as an entire region.
  • Industry-Specific Non-Competes: Industry-specific non-compete agreements prohibit employees from working in a particular industry or field that directly competes with their current employer. For example, a software developer leaving a tech company might be barred from working for other software companies.
  • Non-Competes with Customer Restrictions: Some non-compete agreements focus on preventing employees from soliciting or doing business with the current employer’s clients or customers.
  • Non-Competes for Founders and Entrepreneurs: Founders and entrepreneurs may also sign non-compete agreements to prevent them from launching competing ventures during or after their tenure with a company.

In Arkansas, the enforceability of non-compete agreements is subject to specific criteria. These agreements must be ancillary to an employment relationship and serve a legitimate business interest of the employer.

 

 

Additionally, non-compete agreements must be reasonable in terms of time and scope to be enforceable under Arkansas law.

Courts in Arkansas generally uphold non-compete agreements that are deemed reasonable and necessary to protect the employer’s business interests, including trade secrets, customer lists, and goodwill.

 

Consequences of Violating a Non-Compete Agreement in Arkansas

Violating a valid and enforceable non-compete agreement in Arkansas can have significant consequences. Employers may pursue remedies, such as lawsuits for monetary damages or injunctions, to prevent further violations. As you might expect, these types of legal actions may impact an individual's future employment opportunities within the state, limiting their career prospects.

 

Do You Need Help?

Employees should review and negotiate these agreements before signing. Seeking legal advice from Arkansas-based attorneys experienced in employment law is crucial to understanding rights and options. Employees can also challenge overly restrictive agreements in Arkansas courts, leveraging legal avenues to protect their interests.

If you have questions or concerns regarding employment law in Arkansas, the experienced team at Hickey & Hull Law Partners is here to help.

Chat, fill out our online form, or contact us today to get a free consultation. Our River Valley office number is 479.434.2414, and our Northwest Arkansas number is 479.802.6560.