(B) An employer`s right to financial damages for breach of a non-compete agreement. However, the law does not apply to non-solicitation, hiring or hiring of employees, confidentiality agreements, non-disclosure agreements or other terms of an employment contract; The current common law would continue to apply to these provisions. In addition, the law excludes employees with professional licenses in medical fields from coverage. Under the new law, employers have more flexibility in formulating non-compete obligations, provided a court can change a provision if necessary, rather than invalidating the entire contract. Common law principles continue to apply when authorizing measures to protect commercial interests. 2. The appropriateness of a noncompete agreement is determined upon review: A non-compete obligation that goes beyond these particular factors could easily be the subject of litigation and possibly be declared invalid by an Arkansas court. To learn more about non-compete practices in Arkansas, read on and speak with an experienced commercial litigation attorney in Arkansas. The question of whether blue-pencil-non-compete courts will frequently arise in litigation, and this is a nuance in the law that varies greatly from state to state, so the evaluation of a non-compete clause must always be done with forum and legal selection clauses in mind.
The above provisions reflect legislative changes in several respects. Perhaps the biggest change is that, under the previous Arkansas law, Arkansas courts did not have the power to reform overly broad judicial restrictions. On the contrary, the non-compete obligation had to be as valid as it was formulated. By giving Arkansas courts the power to rewrite overly broad restrictions, the law completely reverses the law. When you were hired, you may have been asked to sign a non-compete agreement. This agreement prohibits you from working with competing companies in the same industry or industry after leaving your current employer for a certain period of time and in a specific geographic area. [1] X Trusted source Workplace Fairness Non-profit organization focused on public education and advocacy on labour law issues Go to source When you signed the agreement, you may not have thought much about it. After all, you`ve recently started a new job – you probably haven`t thought about leaving.
However, if you decide it`s time to move on, a non-compete clause can seriously limit your options when looking for a new position. That`s why many states have strict laws that limit the scope of noncompete laws, and judges are reluctant to enforce them, making it less difficult for you to opt out of a non-compete clause you sign. [2] X Research Source [3] X Research Source Since the law does not provide for retroactive application, employers who wish to submit new or amended agreements to employees would have to do so after the legislation comes into force in order to benefit from the law. For non-compete obligations signed after July 21, 2015, a reviewing court “must” “terminate” a non-compete agreement that is inappropriate and imposes a greater restriction than is necessary to protect the legitimate business interests of the employer. The court then applies the non-compete obligation under strict conditions. Not all non-compete obligations will contain clauses that can easily be identified as overly broad or appropriate. This can lead companies to question whether a contract is enforceable, and former employees may also fear civil liability for misinterpreting the terms of the contract. Under Law 921, a non-competition obligation is enforced if the agreement is an agreement ancillary to an employment relationship or part of an otherwise enforceable contract or contract of employment, provided that: (f) (1) If the restrictions in a non-compete agreement are found to be unreasonable and impose a restriction greater than necessary to protect the legitimate business interests of the employer in accordance with subsection (a)(1) of this article, The court reformed the agreement not to compete to the extent necessary to: Noncompete employers in Arkansas should review their agreements to ensure they maximize the protections afforded to them under the new law. For example, employers should consider whether a geographic restriction is necessary to make the restriction proportionate to their business interests and applicable time and application constraints. Similarly, businesses should consider whether they can rely on the rebuttable presumption that two-year restrictions are appropriate. Obviously, these requests require consideration of the current business as well as the employee`s position and responsibilities.
Employers are advised to consult with their employment counsellor before revising their agreements. To avoid a non-compete obligation, first obtain a copy of the agreement you signed to ensure it is binding. For example, if it was never signed by you and a representative of the company, a court will not enforce it. In addition to checking signatures, read the scope of the agreement carefully to see exactly what it implies, as the language is often vague or misleading. For example, if the agreement prohibits you from working for another company that uses “the same or similar technology,” it would not cover a new job that uses a different technology. If you can`t find your initial agreement, or if everything seems binding, check your state`s laws, as many jurisdictions, such as California, no longer allow non-compete agreements. For more advice from our legal co-author, including how to go to court for your non-compete obligation, read on! (e) (1) In a private law action, a court may award damages to the employer for breach of a non-competition agreement, reasonable injunction, or both, as the case may be. In labour law, the “blue pencil” refers to the practice whereby a court concludes that a non-compete obligation is unenforceable because it is too broad, but instead of rejecting the agreement entirely, the court will instead amend it to limit it to make it enforceable. (i) (1) This subsection does not apply to other types of agreements between employers and employees that do not relate to competition or competitive work, including, Governor Asa Hutchinson has a statute (S.B. 998 or Bill 921), which allows a court to enforce the appropriate parts of a non-compete obligation, while deleting overly broad and unenforceable provisions instead of deleting the entire agreement.
The new law, signed on April 1, 2015, is expected to come into force on August 6, 2015. When determining the geographic scope of a non-compete obligation, employers must consider the pressure an employee may face when traveling dozens of miles to find a job to apply for. In order to create a valid contract, the contract must have some value for all parties, this basic give-and-take of goods or services is called consideration. Arkansas law states that the consideration required for a non-compete obligation is satisfied when a person is offered a job or when an employee is offered the prospect of continuing to work at a company. The quid pro quo could also take the form of benefits for an employee when they leave a company in exchange for their promise not to work for a competitor. In any contractual agreement, both parties must give and receive something of value, also known as consideration. The Arkansas courts have held that the initial offer of employment or job retention is sufficient consideration or benefit to the employee if he or she agrees not to compete with the employer in the event of termination. (h) (1) This subsection does not apply to a non-compete agreement that is ancillary to other contractual relationships, including any type of agreement to sell and buy a business, a franchise agreement and any other agreement that is not ancillary to an employment relationship or a contract of employment. On April 2, 2015, Arkansas enacted a new law (the “Act)1 that significantly expands the enforceability of nontrust laws in the state. The law makes significant changes to Arkansas` non-compete obligation. Now, according to the law, job retention is a sufficient consideration for a non-compete agreement to be concluded.
In addition, a two-year limitation period after termination is likely to be appropriate in terms of duration, unless the facts and circumstances of the individual case clearly demonstrate that it is inappropriate in relation to the legitimate business interests of the employer. Damages and injunctive relief may also be awarded. Employers must consider these issues when asking their employees to sign restrictive agreements. It`s also important to know if potential new employees have a non-compete agreement with a former employer. In some cases, the new employer may be held liable to the former employer if hiring the employee would make it contrary to the contract.