Laying Down the Law – are non-compete Agreements Legal in Arizona

with Christopher J. Charles, Esq.  


Business owners in many industries, including real estate, utilize non-compete agreements concerning professional employees and independent contractors and jobs that may involve access to sensitive business data. Non-compete agreements prevent former employees or independent contractors from engaging in the same type of work after their termination, usually for a certain length of time or within a certain geographical area. 

Non-compete agreements are generally legal under Arizona law when they protect the employer from unfair business competition by a former employee. However, these agreements do have some limitations. Non-compete agreements must meet specific criteria to be legally valid. As a result, their enforcement can lead to legal disputes. As a result, having an Arizona business lawyer to advise you on non-compete agreements is wise. 

Enforceability of Non-Compete Agreements  

The restrictions in non-compete agreements adversely affect the ability of workers to work in their fields and support themselves. As a result, courts will uphold non-compete agreements only if they apply to the employer’s legitimate and protectable business purposes and interests. Legitimate business interests may include important information such as trade secrets, customized business practices and procedures, and confidential client lists. Protectable business interests are not readily available to the public but only to the employees with access to such information.  As a result, a non-compete agreement may not be enforceable if it is unreasonable or overbroad in its attempt to prevent the former employee from competing with the employer. While a company has the right to protect its business, it cannot take steps to eliminate all potential competition through a non-compete agreement. Likewise, the court will not permit a company to unreasonably prevent a person from earning a living. 

Time Restrictions  

Most non-compete agreements define a specific period during which the former employee may not engage in the same type of work that they performed for the employer. The length of this period may depend on the type of job involved. For instance, a two-year restriction period might be appropriate for some higher-level executives. In contrast, six months might be more appropriate for other workers without access to sensitive company information or procedures. An unduly restrictive time limitation in a non-compete can be a reason for a court to find the agreement to be legally invalid. 

Furthermore, the reasonableness of a time restriction also may depend on how quickly the company can replace and train a new employee. For example, suppose the company easily can and does replace and fully train a new employee within two months. In that case, a non-compete with a two-year restriction on a former employee’s ability to work in the same field may be overbroad and unreasonable. 

Geographic Restrictions 

Historically, non-compete agreements contained a geographic restriction on the ability of a former worker to perform the same type of work relative to the former employer’s location. This restriction aims to prevent an employee from leaving one employer and going to work for another nearby employer that competes with the former employer. However, with the rising incidence of global and virtual workplaces, geographic restrictions have become irrelevant in many respects and, thus, no longer may be an automatic provision in a non-compete agreement. 

As with time-related restrictions, courts will enforce geographic restrictions only to the extent necessary to protect the company. For instance, geographic restrictions may be important for small local businesses that provide services to nearby customers or clients. However, those same geographic restrictions may not make sense if a business’ client base is outside the local area. 

Non-Solicitation Restrictions 

Some companies use non-compete agreements to prevent former employees from soliciting their customers, clients, or other employees. But, again, these provisions must be reasonable in scope and duration. For example, the court is unlikely to uphold a “hands-off” provision that covers present customers and extends to former or potential customers. 

We Are Here to Assist You with the Legal Needs of Your Arizona Business 

Our goal is to help you understand the legal matter your business is facing and represent your interests throughout any transaction or dispute in which you are involved. Contact the offices of Provident Law® today at (480) 388-3343 or online and schedule an appointment to speak with one of our real estate specialists or to speak with an Arizona business attorney about your legal business matter. 

Christopher J. Charles is the Founder and Managing Partner of Provident Law ®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS ® (the “AAR”). In 2017, Mr. Charles obtained one of the Top Ten Civil Verdicts for his client in a real estate dispute.  Mr. Charles holds the AV ® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions. Christopher regularly teaches continuing education classes at the Arizona School of Real Estate and Business, and he can be reached at or at 480-388-3343.