Arkansas Employee Restrictive Covenants

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Multi-State
Control #:
US-TC0916
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Description

Restrictive covenants in employment agreements can be very useful to companies on the leading edge of technology and business innovation. This document is a general checklist of factors employers should consider with respect to the use of such covenants.

How to fill out Employee Restrictive Covenants?

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FAQ

The Arkansas courts have made it abundantly clear that restrictive non-compete agreements (or ?covenants?) are enforceable if the terms are reasonable and necessary to protect the employer's business interests.

Act 921 embraces the ?blue pencil? rule, which allows for courts to reform an otherwise unreasonable or overbroad non-compete provision. This is a significant departure from prior Arkansas law.

Section 4-75-101 - Covenant not to compete agreements (a) A covenant not to compete agreement is enforceable if the agreement is ancillary to an employment relationship or part of an otherwise enforceable employment agreement or contract to the extent that: (1) The employer has a protectable business interest; and (2) ...

Also known as blue-penciling, blue pencil, or blue-pencil. In the US, blue penciling commonly refers to the practice of modifying, narrowing, or deleting an unenforceable contract or contractual provision so that the remainder of the agreement is enforceable.

The blue pencil doctrine gives courts the authority to strike unreasonable clauses from a non-compete agreement, leaving the rest to be enforced, or actually to modify the agreement to reflect the terms that the parties originally could have and probably should have agreed to.

For example, state and federal law prohibit an employer from firing an employee on the basis of age, sex, race, religion, national origin, disability or genetic information. Also, a woman cannot be fired because she is pregnant or has had an abortion.

Restrictive covenants may contain 4 different types of promises: (1) a promise not to compete with one's former employer; (2) a promise not to solicit or accept business from customers of the former employer; (3) a promise not to recruit or hire away employees of the former employer; and (4) the promise not to use or ...

While similar to the blue pencil doctrine (which is frequently used as a catch-all term to apply to any modification of a restrictive covenant), the purple pencil doctrine differs in that it allows rewriting non-compete agreements to make them enforceable while the blue pencil doctrine, when using the term in its ...

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Arkansas Employee Restrictive Covenants