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Covenants Not to Compete

June 5, 2013

Many employers insert covenants not to compete in their written employment contracts.  Often these covenants are ruled unenforceable because Arizona courts strictly construe such covenants and do not favor their use.  To be enforceable a covenant must contain specific limitations as to duration and geographic scope.

 

“The legitimate purpose of post-employment restraints is to prevent competitive use, for a time, of information or relationships which pertain peculiarly to the employer and which the employee acquired in the course of the employment.”  Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (Ariz.,1999).  If a covenant is not limited to serve this specific purpose it will likely be unenforceable.

 

Further, Arizona courts have held that “in the commercial context, [w]hen the restraint is for the purpose of protecting customer relationships, its duration is reasonable only if it is no longer than necessary for the employer to put a new man on the job and for the new employee to have a reasonable opportunity to demonstrate his effectiveness to the customers.”  Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (Ariz.,1999).

 

When properly drafted a covenant not to compete can protect a company’s clientele, trade secrets and business interests.  However, if poorly drafted these covenants are worthless.  Our attorneys have experience enforcing and challenging covenants not to compete for employers and employees.  For more information please contact one of our attorneys at 520-792-0448 or attorneys@durazzo-eckel.com.

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