Federal & State Regulations | Non-compete agreements - Arkansas

State Info

Summary of differences between federal and state regulations

In Arkansas, a noncompete agreement is enforceable if the agreement is ancillary to an employment relationship or part of an otherwise enforceable employment agreement or contract to the extent that:

The employer has a protectable business interest; and
The noncompete agreement is 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.

To determine whether a noncompete agreement is reasonable, an employer should consider:

The nature of the employer's protectable business interest;
The geographic scope of the employer's business and whether a geographic limitation is feasible under the circumstances,
Whether 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.

A noncompete agreement that lacks a defined geographic restriction will not automatically make the agreement overly broad if the agreement is limited in time and scope in a manner that is not greater than necessary to defend the protectable business interests of the employer.

A post-termination restriction of two years will typically be reasonable unless the facts and circumstances of a particular case clearly demonstrate that it is unreasonable compared to the employer's protectable business interest.

Protectable business interests include the employer's

Trade secrets;
Intellectual property;
Customer lists;
Goodwill with customers;
Methods;
Profit margins;
Costs;
Other confidential business information that is confidential, proprietary, and increases in value from not being known by a competitor;
Training and education of employees; and
Other valuable data that the employer has provided to an employee that an employer would reasonably seek to protect or safeguard from a competitor in the interest of fairness.