What Arizona Employers Need to Know About Non-Solicitation Agreements

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What Arizona Employers Need to Know About Non-Solicitation Agreements

Non-solicitation agreements are commonly used to keep former employees from soliciting their former employer’s customers and fall under the category of restrictive covenants, which also include non-compete and non-disclosure agreements. And while Arizona courts have typically disfavored restrictive covenants, they have enforced non-solicitation agreements so long as they meet three requirements:

  1. The agreement protects a legitimate business interest.
  2. The agreement is reasonable in both duration and scope.
  3. The agreement does not violate Arizona public policy.

Legitimate business interest

Arizona courts have found that employers have a legitimate business interest when it comes to protecting its trade secrets and confidential information—such as customer lists—that an employee may have acquired during employment. For example, the former employee may have developed years of goodwill with the employer’s customers, so it is legitimate to enforce a provision preventing the employee from soliciting those customers for a limited time period. The language in the agreement should provide clear direction on what type of activity is prohibited. In addition, if an employer no longer has business ties with a customer, there is no business interest to protect.

Reasonable duration and scope

The courts will take into consideration the employer’s geographic territory and specific business needs when determining if a non-solicitation agreement is reasonable in terms of duration and scope. To be enforceable, the agreement should be no broader than is necessary to protect an employer’s legitimate business interest. Typically, agreements that specify a time period lasting longer than 12 months will not be enforceable, since Arizona courts have found that an employer’s relationship with its customers can be protected only for as long as necessary to give the new employee sufficient time to develop a relationship with customers and become proficient in his or her job.

Violation of Arizona public policy

In Arizona, employment agreements that restrict a former employer from pursuing work in his or her field is considered against public policy. Usually, the same is true of agreements that place a constraint on customers from doing business with a former employee in the absence of solicitation.

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