Arizona Non-Compete Agreements

A restrictive covenant is enforceable only if the employer proves it (1) protects a legitimate business interest (trade secrets, confidential information, customer relationships); (2) is no broader than necessary in duration, geography, and scope; and (3) is not unreasonable to the employee or contrary to public policy. The burden is on the employer.

In Valley Medical Specialists v. Farber (1999), the Arizona Supreme Court held that physician non-competes implicate a strong public policy (patient choice and access to care) and struck down a five-mile restraint as unreasonable. Expect any covenant touching health care to be scrutinized hard.

Arizona courts will only strike grammatically severableoffending terms ("blue pencil") — they will not rewrite or narrow an overbroad covenant to make it reasonable. If the restraint is too broad, the whole thing can fall, so draft it narrowly from the start.

Narrower tools — non-solicitation of customers or employees, and confidentiality/trade-secret agreements — are generally easier to enforce than a full non-compete and are often the better protection. Tailor each to the actual interest you're protecting.

Use the shortest reasonable duration and tightest geography, reserve non-competes for employees who truly have access to protected interests, lean on non-solicit/NDA for the rest, give consideration for covenants signed mid-employment, and have counsel review anything involving a physician or other licensed professional.