Arkansas Strengthened Its Noncompete Law

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As of Thursday, August 6, Arkansas noncompete law was statutorily modified by the addition of Ark. Code 4-70-207.

With all of the talk about states (like New Hampshire, Hawaii, Massachusetts, Michigan, and Oregon) that have imposed, or are considering imposing, limits (up to an out-right ban) on noncompetes in the employer-employee context, Arkansas has joined the ranks of states (like Alabama, Georgia, Texas, and Wisconsin) that have make it easier to enforce noncompetes.

Under the new law, noncompetes in Arkansas must be 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 (see below). The lack of a geographic limit does not render the agreement unenforceable, provided that the time and scope limits appropriately limit the restriction. Factors to consider include the nature of the employer’s business interest; the geographic scope, including whether a geographic limit is feasible; whether the restriction is limited to specific group of customers or others; and the nature of the employer’s business. In addition, a two-year restriction is presumptively reasonable unless clearly demonstrated otherwise.

Legitimate business interests that may be protected include trade secrets; intellectual property; customer lists; goodwill with customers; knowledge of business practices; methods; profit margins; costs; other confidential information (that is confidential, proprietary, and increases in value from not being known by a competitor); training and education; other valuable employer data (if provided to employee and an employer would reasonably seek to protect or safeguard from a competitor in the interest of fairness).

This will be included in the next update of our 50-state noncompete chart, which will be coming soon!

Please note that the most current version of both the 50 State Noncompete Chart and 50 state and federal survey chart of trade secret laws can always be found on my firm’s resources page.