{ "type": "practice-guide", "canonical": "https://openagreements.org/practice-guides/non-compete/us/arizona", "links": [ { "rel": "self", "href": "https://openagreements.org/practice-guides/non-compete/us/arizona.json", "type": "application/json" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/arizona", "type": "text/html" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/arizona/markdown", "type": "text/markdown" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/arizona/json", "type": "application/json" } ], "data": { "topic": "non-compete", "state": "arizona", "frontmatter": { "title": "Non-Competes in Arizona", "description": "A question-by-question summary of Arizona non-compete law, including the common-law reasonableness test, the strict no-rewrite (blue-pencil) rule, physician covenants under Valley Medical Specialists v. Farber, the broadcast-employee ban in A.R.S. § 23-494, continued-employment consideration, confidentiality covenants treated as de facto non-competes, the Arizona Uniform Trade Secrets Act, sale-of-business covenants, tolling, attorney fees, and the failed HB 2361 statewide-ban bill.", "state": "Arizona", "lastReviewed": "2026-06-03", "license": "CC BY 4.0", "authors": [ "steven-obiajulu" ], "summary": { "enforceability": "reasonable", "bottomLine": "Arizona has no general non-compete statute; an employee covenant is enforceable under common law only if reasonable and no broader than necessary to protect a legitimate business interest.", "keyLaw": "common law (Valley Medical Specialists v. Farber, 982 P.2d 1277 (Ariz. 1999))", "exceptions": "Broadcast-employee ban (A.R.S. § 23-494); physicians enforceable only under heightened scrutiny", "courtNarrowing": "trimOnly", "appliesToContractors": "unclear", "extendedForBreach": "Not addressed", "maxLength": "No statutory limit", "noticeRequirement": "None", "incomeThreshold": "None", "saleOfBusiness": "Sale covenants get more latitude than employment covenants (Gann)", "customerNonSolicit": "Reasonableness test applies", "employeeNonSolicit": "Reasonableness test applies" }, "about": [ "Arizona non-compete agreements", "Arizona restrictive covenant reasonableness test", "Arizona blue-pencil no-rewrite rule", "Arizona physician non-compete rules", "Valley Medical Specialists v. Farber", "Arizona broadcast employee non-compete ban (A.R.S. § 23-494)", "Arizona continued-employment consideration", "Arizona confidentiality covenants as de facto non-competes", "Arizona Uniform Trade Secrets Act (A.R.S. §§ 44-401 to 44-407)", "Arizona sale-of-business non-competes", "Arizona HB 2361 noncompete ban bill" ], "translations": [ { "language": "中文", "status": "planned" }, { "language": "Español", "status": "planned" }, { "language": "Português", "status": "planned" }, { "language": "Deutsch", "status": "planned" } ], "relatedForm": { "slug": "openagreements-restrictive-covenant-arizona" } }, "questions": [ { "slug": "employee-non-compete-enforceability", "label": "Are employee non-competes enforceable?", "heading": "Are employee non-compete agreements enforceable in Arizona?", "answerText": "Sometimes. Arizona has no general statute banning or governing employee non-competes, so the question is decided under common law: a covenant not to compete is enforceable only if it is reasonable. Arizona courts treat these restraints as disfavored and will refuse to enforce one that sweeps further than the employer's legitimate interest requires.", "sources": [ { "id": "q1-farber-reasonableness", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Valley Medical Specialists v. Farber", "citation": "Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (1999).", "url": "https://www.courtlistener.com/opinion/1253291/valley-medical-specialists-v-farber/", "deepLink": "https://www.courtlistener.com/opinion/1253291/valley-medical-specialists-v-farber/#:~:text=A%20restriction%20is%20unreasonable%20and,likely%20injury%20to%20the%20public.", "proposition": "The Arizona Supreme Court holds that a restrictive covenant is unreasonable, and will not be enforced, if it is broader than necessary to protect the employer's legitimate interest or if that interest is outweighed by hardship to the employee and injury to the public.", "verbatimQuote": "A restriction is unreasonable and thus will not be enforced: (1) if the restraint is greater than necessary to protect the employer's legitimate interest; or (2) if that interest is outweighed by the hardship to the employee and the likely injury to the public.", "date": "1999-06-18", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q1-farber-reasonableness" }, { "id": "q1-amex-disfavored", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Amex Distributing Co. v. Mascari", "citation": "Amex Distributing Co. v. Mascari, 150 Ariz. 510, 724 P.2d 596 (Ct. App. 1986).", "url": "https://www.courtlistener.com/opinion/1211495/amex-distributing-co-inc-v-mascari/", "deepLink": "https://www.courtlistener.com/opinion/1211495/amex-distributing-co-inc-v-mascari/#:~:text=Restrictive%20covenants%20which%20tend%20to,termination%20of%20employment%20are%20disfavored.", "proposition": "Arizona courts disfavor restrictive covenants that tend to prevent a former employee from pursuing a similar vocation after employment ends.", "verbatimQuote": "Restrictive covenants which tend to prevent an employee from pursuing a similar vocation after termination of employment are disfavored.", "date": "1986-07-03", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q1-amex-disfavored" } ] }, { "slug": "reasonableness-test", "label": "What makes a covenant reasonable?", "heading": "What makes a non-compete reasonable under Arizona law?", "answerText": "A restraint that is no broader than necessary to protect a legitimate business interest. The employer must identify a protectable interest — such as trade secrets, confidential information, or customer goodwill — and the restriction's duration, geography, and scope of prohibited activity must be tailored to that interest. The employee's hardship is one of the factors weighed in the analysis.", "sources": [ { "id": "q2-amex-reasonable", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Amex Distributing Co. v. Mascari", "citation": "Amex Distributing Co. v. Mascari, 150 Ariz. 510, 724 P.2d 596 (Ct. App. 1986).", "url": "https://www.courtlistener.com/opinion/1211495/amex-distributing-co-inc-v-mascari/", "deepLink": "https://www.courtlistener.com/opinion/1211495/amex-distributing-co-inc-v-mascari/#:~:text=Reasonable%20restraints%2Dthose%20no%20broader%20than,interests%2Dwill%20be%20enforced%20in%20Arizona.", "proposition": "Arizona enforces restraints that are no broader than the employer's legitimately protectable interests.", "verbatimQuote": "Reasonable restraints-those no broader than the employer's legitimately protectable interests-will be enforced in Arizona.", "date": "1986-07-03", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q2-amex-reasonable" }, { "id": "q2-amex-hardship", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Amex Distributing Co. v. Mascari", "citation": "Amex Distributing Co. v. Mascari, 150 Ariz. 510, 724 P.2d 596 (Ct. App. 1986).", "url": "https://www.courtlistener.com/opinion/1211495/amex-distributing-co-inc-v-mascari/", "deepLink": "https://www.courtlistener.com/opinion/1211495/amex-distributing-co-inc-v-mascari/#:~:text=Hardship%20to%20the%20employee%2C%20however%2C,be%20considered%20in%20determining%20reasonableness.", "proposition": "Hardship to the employee is a factor Arizona courts consider in determining whether a restraint is reasonable.", "verbatimQuote": "Hardship to the employee, however, is one of the factors to be considered in determining reasonableness.", "date": "1986-07-03", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q2-amex-hardship" }, { "id": "q2-hilb-protectable", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hilb, Rogal & Hamilton Co. of Arizona v. McKinney", "citation": "Hilb, Rogal & Hamilton Co. of Arizona v. McKinney, 190 Ariz. 213, 946 P.2d 464 (Ct. App. 1997).", "url": "https://www.courtlistener.com/opinion/1124526/hilb-rogal-hamilton-co-of-arizona-inc-v-mckinney/", "deepLink": "https://www.courtlistener.com/opinion/1124526/hilb-rogal-hamilton-co-of-arizona-inc-v-mckinney/#:~:text=A%20restrictive%20covenant%20%2D%20whether,the%20employer's%20legitimate%20business%20interest.", "proposition": "A restrictive covenant is enforceable in Arizona only so long as it is no broader than necessary to protect the employer's legitimate business interest.", "verbatimQuote": "A restrictive covenant - whether a covenant not to compete or an anti-piracy agreement - is enforceable as long as it is no broader than necessary to protect the employer's legitimate business interest.", "date": "1997-12-24", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q2-hilb-protectable" }, { "id": "q2-hilb-holding", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hilb, Rogal & Hamilton Co. of Arizona v. McKinney", "citation": "Hilb, Rogal & Hamilton Co. of Arizona v. McKinney, 190 Ariz. 213, 946 P.2d 464 (Ct. App. 1997).", "url": "https://www.courtlistener.com/opinion/1124526/hilb-rogal-hamilton-co-of-arizona-inc-v-mckinney/", "deepLink": "https://www.courtlistener.com/opinion/1124526/hilb-rogal-hamilton-co-of-arizona-inc-v-mckinney/#:~:text=We%20hold%20that%20HRH%20had,in%20the%20Bell%20Ford%20account.", "proposition": "The Court of Appeals refused to enforce the covenant because the employer had no protectable interest in the account at issue.", "verbatimQuote": "We hold that HRH had no protectable interest in the Bell Ford account.", "date": "1997-12-24", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q2-hilb-holding" } ] }, { "slug": "court-narrowing", "label": "Will a court narrow an overbroad covenant?", "heading": "Will an Arizona court narrow or rewrite an overbroad non-compete?", "answerText": "No — not by rewriting it. Arizona follows a strict blue-pencil rule: a court may eliminate a grammatically severable unreasonable term, but it may not add language or rewrite the covenant to make it reasonable. If the unreasonable portion is not severable, the whole restraint falls.", "sources": [ { "id": "q3-varsity-bluepencil", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Varsity Gold, Inc. v. Porzio", "citation": "Varsity Gold, Inc. v. Porzio, 202 Ariz. 355, 45 P.3d 352 (Ct. App. 2002).", "url": "https://www.courtlistener.com/opinion/2638678/varsity-gold-inc-v-porzio/", "deepLink": "https://www.courtlistener.com/opinion/2638678/varsity-gold-inc-v-porzio/#:~:text=The%20court%20explained%20that%2C%20while,add%20provisions%20or%20rewrite%20them.", "proposition": "Arizona courts may eliminate grammatically severable unreasonable terms but cannot add provisions or rewrite a restrictive covenant.", "verbatimQuote": "The court explained that, while Arizona courts may \"blue pencil\" a restrictive covenant by eliminating grammatically sever-able, unreasonable terms, the court cannot add provisions or rewrite them.", "date": "2002-05-03", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q3-varsity-bluepencil" }, { "id": "q3-varsity-norewrite", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Varsity Gold, Inc. v. Porzio", "citation": "Varsity Gold, Inc. v. Porzio, 202 Ariz. 355, 45 P.3d 352 (Ct. App. 2002).", "url": "https://www.courtlistener.com/opinion/2638678/varsity-gold-inc-v-porzio/", "deepLink": "https://www.courtlistener.com/opinion/2638678/varsity-gold-inc-v-porzio/#:~:text=In%20summary%2C%20we%20decide%20that,render%20it%20reasonable%20and%20enforceable.", "proposition": "The Court of Appeals held that the trial court erred by rewriting the covenant to render it reasonable and enforceable.", "verbatimQuote": "In summary, we decide that the trial court erred by rewriting the restrictive covenant to render it reasonable and enforceable.", "date": "2002-05-03", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q3-varsity-norewrite" }, { "id": "q3-bryceland-severable", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Bryceland v. Northey", "citation": "Bryceland v. Northey, 160 Ariz. 213, 772 P.2d 36 (Ct. App. 1989).", "url": "https://www.courtlistener.com/opinion/1414072/bryceland-v-northey/", "deepLink": "https://www.courtlistener.com/opinion/1414072/bryceland-v-northey/#:~:text=Neither%20the%20contract%20itself%20nor,of%20the%20contract%20was%20severable.", "proposition": "Where the unreasonable portion of a covenant is not severable, the restraint is not enforced.", "verbatimQuote": "Neither the contract itself nor other evidence in the record indicates that this unreasonable portion of the contract was severable.", "date": "1989-04-04", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q3-bryceland-severable" } ] }, { "slug": "physician-rules", "label": "What rules apply to physician covenants?", "heading": "What non-compete rules apply to physicians in Arizona?", "answerText": "Physician non-competes are not categorically void, but they face heightened scrutiny. In Farber, the Arizona Supreme Court held that physician covenants must be strictly construed for reasonableness because of the public interest in patients' ability to choose their doctor, and it refused to enforce the covenant before it on public-policy grounds.", "sources": [ { "id": "q4-farber-strict", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Valley Medical Specialists v. Farber", "citation": "Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (1999).", "url": "https://www.courtlistener.com/opinion/1253291/valley-medical-specialists-v-farber/", "deepLink": "https://www.courtlistener.com/opinion/1253291/valley-medical-specialists-v-farber/#:~:text=In%20light%20of%20the%20great,be%20strictly%20construed%20for%20reasonableness.", "proposition": "Physician covenants not to compete are strictly construed for reasonableness because of the public policy interest involved.", "verbatimQuote": "In light of the great public policy interest involved in covenants not to compete between physicians, each agreement will be strictly construed for reasonableness.", "date": "1999-06-18", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q4-farber-strict" }, { "id": "q4-farber-publicpolicy", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Valley Medical Specialists v. Farber", "citation": "Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (1999).", "url": "https://www.courtlistener.com/opinion/1253291/valley-medical-specialists-v-farber/", "deepLink": "https://www.courtlistener.com/opinion/1253291/valley-medical-specialists-v-farber/#:~:text=Public%20policy%20concerns%20in%20this,interests%20in%20enforcing%20the%20agreement.", "proposition": "The Arizona Supreme Court refused to enforce the physician covenant because public policy concerns outweighed the employer's protectable interests.", "verbatimQuote": "Public policy concerns in this case outweigh Valley Medical's protectable interests in enforcing the agreement.", "date": "1999-06-18", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q4-farber-publicpolicy" }, { "id": "q4-phoenix-notvoid", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Phoenix Orthopaedic Surgeons, Ltd. v. Peairs", "citation": "Phoenix Orthopaedic Surgeons, Ltd. v. Peairs, 164 Ariz. 54, 790 P.2d 752 (Ct. App. 1989).", "url": "https://www.courtlistener.com/opinion/1425574/phoenix-orthopaedic-surgeons-ltd-v-peairs/", "deepLink": "https://www.courtlistener.com/opinion/1425574/phoenix-orthopaedic-surgeons-ltd-v-peairs/#:~:text=We%20reject%2C%20however%2C%20Dr.%20Peairs',unenforceable%20as%20against%20public%20policy.", "proposition": "Physician covenants not to compete are not all unenforceable as against public policy; a reasonable one can be enforced.", "verbatimQuote": "We reject, however, Dr. Peairs' suggestion that all such covenants not to compete are unenforceable as against public policy.", "date": "1989-11-27", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q4-phoenix-notvoid" } ] }, { "slug": "broadcast-employees", "label": "Can broadcast employees be bound?", "heading": "Can Arizona broadcast employees be required to sign non-competes?", "answerText": "No. Arizona has one statutory non-compete ban, and it covers broadcast employees. Under A.R.S. § 23-494, it is unlawful for a television or radio station or network to require a current or prospective employee to agree to a noncompete clause as a condition of employment.", "sources": [ { "id": "q5-ars-23-494-prohibition", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "A.R.S. § 23-494", "citation": "A.R.S. § 23-494(A).", "url": "https://www.azleg.gov/ars/23/00494.htm", "proposition": "A.R.S. § 23-494(A) makes it unlawful for a broadcast employer to require a current or prospective employee to agree to a noncompete clause as a condition of employment.", "verbatimQuote": "As a condition of employment, it is unlawful for a broadcast employer to require a current or prospective employee to agree to a noncompete clause.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q5-ars-23-494-prohibition" }, { "id": "q5-ars-23-494-definition", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "A.R.S. § 23-494", "citation": "A.R.S. § 23-494(B)(2).", "url": "https://www.azleg.gov/ars/23/00494.htm", "proposition": "A.R.S. § 23-494(B) defines a noncompete clause for the broadcast-employee ban as one prohibiting work in a specific geographic area for a specific period after leaving the broadcast employer.", "verbatimQuote": "\"Noncompete clause\" means a clause in an employment contract with a broadcast employer that prohibits an employee from working in a specific geographic area for a specific period of time after leaving employment with the broadcast employer.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q5-ars-23-494-definition" } ] }, { "slug": "consideration", "label": "Is continued employment enough consideration?", "heading": "Is continued employment enough consideration for an Arizona non-compete?", "answerText": "Yes. Arizona follows the majority rule that continued at-will employment is sufficient consideration to support a covenant, even one signed after employment has already begun. An employer does not have to give a raise, bonus, or promotion to satisfy consideration for a mid-employment covenant — though the covenant still must clear Arizona's reasonableness and no-rewrite rules to be enforceable.", "sources": [ { "id": "q6-mattison-consideration", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Mattison v. Johnston", "citation": "Mattison v. Johnston, 152 Ariz. 109, 730 P.2d 286 (Ct. App. 1986).", "url": "https://www.courtlistener.com/opinion/1118936/mattison-v-johnston/", "deepLink": "https://www.courtlistener.com/opinion/1118936/mattison-v-johnston/#:~:text=Although%20there%20is%20authority%20to,be%20on%20an%20at%2Dwill%20basis.", "proposition": "Continued at-will employment is sufficient consideration to support a restrictive covenant executed after employment has commenced.", "verbatimQuote": "Although there is authority to the contrary, most jurisdictions which have considered the issue have found that continued employment is sufficient consideration to support a restrictive covenant executed after employment has commenced even where employment continues to be on an at-will basis.", "date": "1986-09-16", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q6-mattison-consideration" }, { "id": "q6-compass-continued", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Compass Bank v. Hartley", "citation": "Compass Bank v. Hartley, 430 F. Supp. 2d 989 (D. Ariz. 2006).", "url": "https://www.courtlistener.com/opinion/2317852/compass-bank-v-hartley/", "deepLink": "https://www.courtlistener.com/opinion/2317852/compass-bank-v-hartley/#:~:text=In%20addition%2C%20the%20promise%20of,be%20on%20an%20at%2Dwill%20basis.", "proposition": "Applying Arizona law, a federal court held that the promise of continued employment validates a covenant executed after the employment relationship has commenced, even on an at-will basis.", "verbatimQuote": "In addition, the promise of continued employment validates a covenant executed after the employment relationship has commenced, even where it continues to be on an at-will basis.", "date": "2006-04-28", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q6-compass-continued" } ] }, { "slug": "nonsolicitation-confidentiality", "label": "How are NDAs and non-solicits treated?", "heading": "Are confidentiality and non-solicitation covenants treated as non-competes in Arizona?", "answerText": "They can be. Arizona looks at the functional effect of a restraint, not its label. A confidentiality or non-solicitation covenant that is broad enough to operate as a practical bar on competition is analyzed as a non-compete and judged for reasonableness. In Orca Communications Unlimited, LLC v. Noder, the Court of Appeals held that an unlimited confidentiality covenant was unenforceable as the equivalent of a geographically unrestricted non-compete.", "sources": [ { "id": "q7-orca-defacto", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Orca Communications Unlimited, LLC v. Noder", "citation": "Orca Communications Unlimited, LLC v. Noder, 233 Ariz. 411 (Ct. App. 2013).", "url": "https://www.courtlistener.com/opinion/6604207/orca-communications-unlimited-llc-v-noder/", "deepLink": "https://www.courtlistener.com/opinion/6604207/orca-communications-unlimited-llc-v-noder/#:~:text=Thus%2C%20the%20trial%20court%20did,a%20geographically%20unrestricted%20non%2Dcompetition%20agreement.", "proposition": "An overbroad confidentiality covenant with no temporal or geographic limit is unenforceable as the equivalent of a geographically unrestricted non-compete.", "verbatimQuote": "Thus, the trial court did not err in finding that the confidentiality covenant is unenforceable as the equivalent of a geographically unrestricted non-competition agreement.", "date": "2013-10-17", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q7-orca-defacto" }, { "id": "q7-hilb-antipiracy", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hilb, Rogal & Hamilton Co. of Arizona v. McKinney", "citation": "Hilb, Rogal & Hamilton Co. of Arizona v. McKinney, 190 Ariz. 213, 946 P.2d 464 (Ct. App. 1997).", "url": "https://www.courtlistener.com/opinion/1124526/hilb-rogal-hamilton-co-of-arizona-inc-v-mckinney/", "deepLink": "https://www.courtlistener.com/opinion/1124526/hilb-rogal-hamilton-co-of-arizona-inc-v-mckinney/#:~:text=A%20restrictive%20covenant%20%2D%20whether,the%20employer's%20legitimate%20business%20interest.", "proposition": "Anti-piracy and non-solicitation covenants are enforceable in Arizona only so long as they are no broader than necessary to protect the employer's legitimate business interest.", "verbatimQuote": "A restrictive covenant - whether a covenant not to compete or an anti-piracy agreement - is enforceable as long as it is no broader than necessary to protect the employer's legitimate business interest.", "date": "1997-12-24", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q7-hilb-antipiracy" } ] }, { "slug": "trade-secrets", "label": "How does the trade-secrets act interact?", "heading": "How does the Arizona Uniform Trade Secrets Act interact with non-competes?", "answerText": "The Arizona Uniform Trade Secrets Act (AUTSA), A.R.S. §§ 44-401 to 44-407, protects trade secrets independently of any covenant, so an employer often has a remedy even without an enforceable non-compete. AUTSA displaces conflicting common-law claims for trade-secret misappropriation, but it expressly preserves contractual remedies and other civil remedies not based on misappropriation.", "sources": [ { "id": "q8-ars-44-401-definition", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "A.R.S. § 44-401", "citation": "A.R.S. § 44-401(4).", "url": "https://www.azleg.gov/ars/44/00401.htm", "proposition": "A.R.S. § 44-401(4) defines a trade secret as information that derives independent economic value from not being generally known and is the subject of reasonable efforts to maintain its secrecy.", "verbatimQuote": "\"Trade secret\" means information, including a formula, pattern, compilation, program, device, method, technique or process, that both: (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q8-ars-44-401-definition" }, { "id": "q8-orca2014-nondisplacement", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Orca Communications Unlimited, LLC v. Noder", "citation": "Orca Communications Unlimited, LLC v. Noder, 236 Ariz. 180, 337 P.3d 545 (2014).", "url": "https://www.courtlistener.com/opinion/2752976/orca-communications-v-ann-noder-et-virpitch-public/", "deepLink": "https://www.courtlistener.com/opinion/2752976/orca-communications-v-ann-noder-et-virpitch-public/#:~:text=We%20hold%20that%20AUTSA%20does,is%20not%20a%20trade%20secret.", "proposition": "The Arizona Supreme Court held that AUTSA does not displace common-law claims based on misappropriation of confidential information that is not a trade secret.", "verbatimQuote": "We hold that AUTSA does not displace common-law claims based on alleged misappropriation of confidential information that is not a trade secret.", "date": "2014-11-19", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q8-orca2014-nondisplacement" }, { "id": "q8-ars-44-407-displacement", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "A.R.S. § 44-407", "citation": "A.R.S. § 44-407(A).", "url": "https://www.azleg.gov/ars/44/00407.htm", "proposition": "A.R.S. § 44-407(A) provides that AUTSA displaces conflicting tort, restitutionary, and other state-law civil remedies for trade-secret misappropriation.", "verbatimQuote": "Except as provided in subsection B, this chapter displaces conflicting tort, restitutionary and other laws of this state providing civil remedies for misappropriation of a trade secret.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q8-ars-44-407-displacement" }, { "id": "q8-ars-44-407-contract", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "A.R.S. § 44-407", "citation": "A.R.S. § 44-407(B)(1).", "url": "https://www.azleg.gov/ars/44/00407.htm", "proposition": "A.R.S. § 44-407(B) preserves contractual remedies whether or not based on misappropriation of a trade secret, so non-compete and confidentiality contract claims survive AUTSA.", "verbatimQuote": "Contractual remedies, whether or not based on misappropriation of a trade secret.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q8-ars-44-407-contract" }, { "id": "q8-ars-44-406-sol", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "A.R.S. § 44-406", "citation": "A.R.S. § 44-406.", "url": "https://www.azleg.gov/ars/44/00406.htm", "proposition": "A.R.S. § 44-406 sets a three-year limitations period for a trade-secret misappropriation action, running from discovery or when it should reasonably have been discovered.", "verbatimQuote": "An action for misappropriation must be brought within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q8-ars-44-406-sol" } ] }, { "slug": "sale-of-business", "label": "Are sale-of-business covenants different?", "heading": "Are sale-of-business non-competes treated differently in Arizona?", "answerText": "Yes, somewhat more leniently. A covenant given as part of the sale of a business protects the goodwill the buyer paid for, so Arizona courts will ordinarily uphold one that is limited in time and geographic scope. The covenant still must be reasonable and cannot bar the seller from all business whatsoever.", "sources": [ { "id": "q9-gann-validity", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Gann v. Morris", "citation": "Gann v. Morris, 122 Ariz. 517, 596 P.2d 43 (Ct. App. 1979).", "url": "https://www.courtlistener.com/opinion/1362794/gann-v-morris/", "deepLink": "https://www.courtlistener.com/opinion/1362794/gann-v-morris/#:~:text=Where%20limited%20as%20to%20time,refrain%20from%20all%20business%20whatsoever.", "proposition": "A sale-of-business covenant limited as to time and space is ordinarily valid unless it bars the seller from all business whatsoever.", "verbatimQuote": "Where limited as to time and space, the covenant is ordinarily valid unless it is to refrain from all business whatsoever.", "date": "1979-03-29", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q9-gann-validity" }, { "id": "q9-gann-goodwill", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Gann v. Morris", "citation": "Gann v. Morris, 122 Ariz. 517, 596 P.2d 43 (Ct. App. 1979).", "url": "https://www.courtlistener.com/opinion/1362794/gann-v-morris/", "deepLink": "https://www.courtlistener.com/opinion/1362794/gann-v-morris/#:~:text=The%20sale%20of%20such%20a,transfer%20of%20the%20good%20will.", "proposition": "A sale-of-business covenant is given latitude because the sale includes the business's goodwill, which the buyer is entitled to protect.", "verbatimQuote": "The sale of such a business necessarily includes the sale of good will and the purchaser has the right to assure himself as best he can of the transfer of the good will.", "date": "1979-03-29", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q9-gann-goodwill" }, { "id": "q9-berkadia-unreasonable", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Berkadia Real Estate Advisors LLC v. Wadlund", "citation": "Berkadia Real Estate Advisors LLC v. Wadlund, No. CV-22-00049-TUC-CKJ, 2024 WL 4125533 (D. Ariz. June 27, 2024).", "url": "https://www.govinfo.gov/app/details/USCOURTS-azd-4_22-cv-00049/USCOURTS-azd-4_22-cv-00049-10", "proposition": "Applying Arizona law, the District of Arizona found a sale-of-business covenant's scope of activity, geographic scope, and duration unreasonable, singularly and in combination, and therefore unenforceable.", "verbatimQuote": "The Court finds that the scope of activity, the geographic scope, and the duration of the TCRA restrictive covenants, singularly and in combination, are unreasonable.", "date": "2024-06-27", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q9-berkadia-unreasonable" } ] }, { "slug": "extended-for-breach", "label": "Does the period extend during breach?", "heading": "Does an Arizona non-compete period extend while the employee is in breach or litigation is pending?", "answerText": "Arizona law does not squarely answer this. No Arizona appellate decision appears to have decided whether a non-compete period tolls — pauses and extends — while the former employee is violating the covenant or while enforcement litigation is pending. Because Arizona judges covenants for reasonableness and will not rewrite an overbroad term, a contractual extension-on-breach clause is best analyzed as part of the covenant's overall duration and drafted conservatively.", "sources": [ { "id": "q10-farber-reasonableness", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Valley Medical Specialists v. Farber", "citation": "Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (1999).", "url": "https://www.courtlistener.com/opinion/1253291/valley-medical-specialists-v-farber/", "deepLink": "https://www.courtlistener.com/opinion/1253291/valley-medical-specialists-v-farber/#:~:text=A%20restriction%20is%20unreasonable%20and,likely%20injury%20to%20the%20public.", "proposition": "Farber states the general Arizona reasonableness standard: a restraint is unreasonable, and will not be enforced, if it is greater than necessary to protect the employer's legitimate interest or if that interest is outweighed by employee hardship and public injury.", "verbatimQuote": "A restriction is unreasonable and thus will not be enforced: (1) if the restraint is greater than necessary to protect the employer's legitimate interest; or (2) if that interest is outweighed by the hardship to the employee and the likely injury to the public.", "date": "1999-06-18", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q10-farber-reasonableness" }, { "id": "q10-varsity-norewrite", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Varsity Gold, Inc. v. Porzio", "citation": "Varsity Gold, Inc. v. Porzio, 202 Ariz. 355, 45 P.3d 352 (Ct. App. 2002).", "url": "https://www.courtlistener.com/opinion/2638678/varsity-gold-inc-v-porzio/", "deepLink": "https://www.courtlistener.com/opinion/2638678/varsity-gold-inc-v-porzio/#:~:text=The%20court%20explained%20that%2C%20while,add%20provisions%20or%20rewrite%20them.", "proposition": "Varsity Gold states that Arizona courts may eliminate grammatically severable unreasonable terms but cannot add provisions or rewrite a restrictive covenant.", "verbatimQuote": "The court explained that, while Arizona courts may \"blue pencil\" a restrictive covenant by eliminating grammatically sever-able, unreasonable terms, the court cannot add provisions or rewrite them.", "date": "2002-05-03", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q10-varsity-norewrite" } ] }, { "slug": "non-signatory-forum-clause", "label": "Can a non-signatory enforce a forum clause?", "heading": "Can a non-signatory enforce a forum-selection clause in an Arizona contract dispute?", "answerText": "Generally no, based only on a close relationship to a party. In 2025 the Arizona Supreme Court declined to adopt the closely-related-party doctrine for forum-selection clauses, holding that the provisions of the contract control. A person or company that did not sign the contract — an affiliate, a founder, or a related entity — cannot enforce its forum-selection clause against a signatory merely because it is closely related to a party.", "sources": [ { "id": "q11-henderson-forum", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Henderson v. Moskowitz", "citation": "Henderson v. Moskowitz (Ariz. Nov. 28, 2025).", "url": "https://www.courtlistener.com/opinion/10743771/henderson-v-hon-moskowitzsullivan/", "deepLink": "https://www.courtlistener.com/opinion/10743771/henderson-v-hon-moskowitzsullivan/#:~:text=We%20decline%20to%20adopt%20that,under%20a%20contract%20are%20ample.", "proposition": "The Arizona Supreme Court declined to adopt the closely-related-party doctrine for forum-selection clauses, holding that a non-signatory cannot enforce such a clause against a signatory based merely on a close relationship, because the provisions of the contract control.", "verbatimQuote": "We decline to adopt that doctrine with regard to forum selection clauses, holding that the provisions of the contract control and that other established doctrines providing non-signatories with benefits under a contract are ample.", "date": "2025-11-28", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q11-henderson-forum" } ] }, { "slug": "out-of-state-law", "label": "Can another state's law be chosen to make it enforceable?", "heading": "Can an employer use another state's law to make an Arizona non-compete easier to enforce?", "answerText": "Often not, when Arizona has the strongest connection to the employment. A federal court in Arizona declined to apply a Washington choice-of-law clause that would have imported Washington's more employer-friendly approach to non-competes, reasoning that doing so would be contrary to a fundamental policy of Arizona law.", "sources": [ { "id": "qcol-pathway-policy", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Pathway Medical Technologies, Inc. v. Nelson", "citation": "Pathway Medical Technologies, Inc. v. Nelson, No. CV11-0857-PHX-DGC, 2011 WL 4543928 (D. Ariz. Sept. 30, 2011).", "url": "https://scholar.google.com/scholar_case?case=17995886739076358627", "proposition": "Applying Arizona law, the District of Arizona observed that Arizona does not approve of broad non-compete provisions, a fundamental policy that a foreign choice-of-law clause cannot be used to evade.", "verbatimQuote": "Arizona law does not approve of broad non-compete provisions.", "date": "2011-09-30", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-qcol-pathway-policy" }, { "id": "qcol-pathway-187", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Pathway Medical Technologies, Inc. v. Nelson", "citation": "Pathway Medical Technologies, Inc. v. Nelson, No. CV11-0857-PHX-DGC, 2011 WL 4543928 (D. Ariz. Sept. 30, 2011).", "url": "https://scholar.google.com/scholar_case?case=17995886739076358627", "proposition": "The District of Arizona concluded that a Washington choice-of-law clause was likely unenforceable under Restatement (Second) of Conflict of Laws § 187(2)(b) because applying Washington law would be contrary to a fundamental policy of Arizona.", "verbatimQuote": "the Agreement's choice of Washington law likely is not enforceable under Restatement section 187(2)(b).", "date": "2011-09-30", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-qcol-pathway-187" } ] }, { "slug": "attorney-fees", "label": "Who pays attorney fees?", "heading": "Who pays attorney fees in an Arizona non-compete lawsuit?", "answerText": "Either side can be ordered to. A non-compete dispute arises out of a contract, so A.R.S. § 12-341.01 lets the court award reasonable attorney fees to the successful party. The award is discretionary, but the fee-shifting risk runs both ways: an employer that loses an overreaching enforcement action can be ordered to pay the former employee's fees.", "sources": [ { "id": "q12-ars-12-341-fees", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "A.R.S. § 12-341.01", "citation": "A.R.S. § 12-341.01(A).", "url": "https://www.azleg.gov/ars/12/00341-01.htm", "proposition": "A.R.S. § 12-341.01(A) authorizes a discretionary award of reasonable attorney fees to the successful party in a contested action arising out of a contract, including non-compete enforcement litigation.", "verbatimQuote": "In any contested action arising out of a contract, express or implied, the court may award the successful party reasonable attorney fees.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q12-ars-12-341-fees" } ] }, { "slug": "recent-developments", "label": "What are the recent developments?", "heading": "What are the recent developments in Arizona non-compete law?", "answerText": "Arizona remains a common-law reasonableness state, and recent efforts to change that by statute have not been enacted. In 2026, HB 2361 proposed adding a new statute, A.R.S. § 23-207, to bar any public or private employer from requiring a noncompete clause; a near-identical 2025 bill, HB 2589, proposed the same ban. Neither has become law, so Arizona still has no general non-compete statute outside the broadcast-employee context.", "sources": [ { "id": "q13-hb2361", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Arizona HB 2361 (2026)", "citation": "Ariz. H.B. 2361, 57th Leg., 2d Reg. Sess. (2026).", "url": "https://www.azleg.gov/legtext/57leg/2R/bills/HB2361P.htm", "proposition": "HB 2361 (2026) is a proposed bill that would have added A.R.S. § 23-207 making it unlawful for any public or private employer to require a noncompete clause as a condition of employment.", "verbatimQuote": "As a condition of employment, it is unlawful for a public or private employer to require a current or prospective employee to agree to a noncompete clause.", "date": "2026-01-20", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q13-hb2361" }, { "id": "q13-hb2589", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Arizona HB 2589 (2025)", "citation": "Ariz. H.B. 2589, 57th Leg., 1st Reg. Sess. (2025).", "url": "https://www.azleg.gov/legtext/57leg/1R/bills/HB2589P.htm", "proposition": "HB 2589 (2025) is a proposed bill, the predecessor to HB 2361, that would have added A.R.S. § 23-207 making it unlawful for any public or private employer to require a noncompete clause as a condition of employment.", "verbatimQuote": "As a condition of employment, it is unlawful for a public or private employer to require a current or prospective employee to agree to a noncompete clause.", "date": "2025-01-27", "anchor": "https://openagreements.org/practice-guides/non-compete/us/arizona#src-q13-hb2589" } ] } ] } }