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Can I require employees to sign non-compete agreements in Arkansas? What are the requirements?
Yes, you can require employees to sign non-compete agreements in Arkansas if the agreement meets certain requirements.
Requirements for Non-Compete Agreements in Arkansas
To require employees to sign non-compete agreements in Arkansas, the agreement must be ancillary to an employment relationship or part of an otherwise enforceable employment agreement or contract. The employer must have a protectable business interest, which includes trade secrets, intellectual property, customer lists, goodwill with customers, knowledge of business practices, methods, profit margins, costs, other confidential business information, training and education of employees, and other valuable employer data. The covenant not to compete agreement must be limited with respect to time and scope in a manner that is not greater than necessary to defend the protectable business interest of the employer [1.1].
The reasonableness of a covenant not to compete agreement shall be determined after considering the nature of the employer’s protectable business interest, the geographic scope of the employer’s business, whether or not a geographic limitation is feasible under the circumstances, whether or not the restriction placed on the employee is limited to a specific group of customers or other individuals or entities associated with the employer’s business, and the nature of the employer’s business [1.1].
A post-termination restriction of two (2) years is presumptively reasonable as to length of time 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 [1.1].
If restrictions in a covenant not to compete agreement are found to be unreasonable and impose a greater restraint than is necessary to protect the protectable business interest of the employer, the court shall reform the covenant not to compete agreement 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. The court shall enforce the covenant not to compete agreement under the reformed terms and conditions [1.1].
An employee’s continued employment is sufficient consideration for a covenant not to compete agreement [1.1].
Note that this section does not apply to other types of agreements between employers and employees that do not concern competition or competitive work, including agreements not to solicit, recruit, or hire employees, confidentiality agreements, nondisclosure agreements, and the terms and conditions of an employment or employment agreement [1.1].
Additional Context
The additional context documents provided do not provide any further relevant information to answer the query.
Therefore, the answer to your query is as follows:
To require employees to sign non-compete agreements in Arkansas, the agreement must be ancillary to an employment relationship or part of an otherwise enforceable employment agreement or contract. The employer must have a protectable business interest, and the covenant not to compete agreement must be limited with respect to time and scope in a manner that is not greater than necessary to defend the protectable business interest of the employer. A post-termination restriction of two (2) years is presumptively reasonable as to length of time 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. If restrictions in a covenant not to compete agreement are found to be unreasonable, the court shall reform the covenant not to compete agreement 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. An employee’s continued employment is sufficient consideration for a covenant not to compete agreement. Note that this section does not apply to other types of agreements between employers and employees that do not concern competition or competitive work, including agreements not to solicit, recruit, or hire employees, confidentiality agreements, nondisclosure agreements, and the terms and conditions of an employment or employment agreement [1.1].
Source(s):
Jurisdiction
Arkansas