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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.