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What Makes a Restrictive Covenant Enforceable?

In industries throughout Arizona, restrictive covenants such as non-disclosure, non-compete and non-solicitation agreements are increasingly included in employment contracts.

In general, these agreements are designed to protect the business interests of employers, and disputes over the reasonableness of such agreements are often the subject of litigation. Here is what every employee in Arizona should know about restrictive covenants.

What Restrictive Covenants Must Clarify to Be Fair

These three things must be clear to the employee if a restrictive covenant is to be enforceable:

  • The scope of the restrictions
  • The geographic area where the restrictions apply
  • The duration of the restrictions

If the restrictive covenant is unreasonable in scope, geographic area or duration, the agreement may be unenforceable.

If these matters were not clear to you when you signed a restrictive covenant, or if you believe the agreement is unreasonable, seek counsel from an employment law attorney with extensive experience in this area of law.

A Rundown of Types of Agreements

Non-Disclosure Agreements -- These are also known as confidentiality agreements, proprietary information agreements, confidential disclosure agreements and secrecy agreements.

Non-disclosure agreements typically restrict access to trade secrets or other company materials to the privileged parties, usually the employer and the employee. A contract violation could occur if an employee shares confidential company materials with a third party or the public.

Non-Solicitation Agreements -- With these, employees or former employees agree not to solicit business or other employees in a way that causes competition with the employer or former employer.

These agreements are usually written in such a way as to be enforceable for up to a year after an employee's employment has been terminated.

Non-Compete Agreements -- Like non-solicitation agreements, non-compete or confidentiality agreements are designed to prevent employees from engaging in behavior that would constitute competition with the employer.

Sharing trade secrets with another company is one example of violating a confidentiality agreement, but what constitutes competition is often the subject of contract disputes.

How We Can Help

The Zoldan Law Group advises and represents Arizona employees in disputes over restrictive covenants. We also provide contract review to determine whether such agreements infringe upon our clients' rights.

For more on these matters, please see our overview of contract disputes. With offices in Scottsdale, we advise and represent clients throughout Arizona.

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