Are non-compete agreements enforceable in Arizona?
1. Baseline Rule. No governing statute. Arizona common law, anchored by Valley Medical Specialists v. Farber, 194 Ariz. 363 (1999), and Bryceland v. Northey, 160 Ariz. 213 (App. 1989), requires that a covenant (a) protect a legitimate business interest, (b) be reasonable in temporal and geographic scope, (c) not impose undue hardship on the employee, and (d) not harm the public.
2. Reasonableness Factors. Legitimate interests include trade secrets, confidential customer information, customer goodwill, and unique services. Duration of 6 months to 2 years and geography tied to actual market are typical.
3. Consideration. Continued at-will employment is sufficient consideration in Arizona, though mid-employment covenants signed without new consideration face scrutiny.
4. Wage Thresholds. None.
5. Blue Pencil / Reformation. Arizona applies a "step-down" rule. Courts may eliminate severable, unreasonable provisions but will not rewrite or modify language. If overbroad terms are integral, the entire covenant fails. Olliver/Pilcher Insurance, Inc. v. Daniels, 148 Ariz. 530 (1986).
6. Industry Carve-Outs. Physicians: Valley Medical Specialists v. Farber held physician non-competes are subject to heightened public-interest scrutiny because they affect patient access and choice; many such covenants fail. Lawyers barred by Ariz. RPC 5.6.
7. FTC Rule. Enjoined nationwide by Ryan LLC v. FTC (E.D. Tex. Aug. 2024); on appeal.
8. Garden Leave / Forfeiture-for-Competition. Permitted.
9. Choice of Law. Arizona courts apply Arizona law where the chosen state's law would conflict with Arizona public policy, particularly regarding physician restraints.
This is legal information, not legal advice.
- You are a physician and your covenant restricts an entire metropolitan area
- Your covenant has multiple overbroad provisions that may all fall together
- Employer seeks a TRO in Maricopa or Pima County Superior Court
- Valley Medical Specialists v. Farber, 194 Ariz. 363 (1999)
- Bryceland v. Northey, 160 Ariz. 213 (App. 1989)
- Olliver/Pilcher Insurance, Inc. v. Daniels, 148 Ariz. 530 (1986)
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.