Are employee non-compete agreements enforceable in Arkansas?
For an employee within the statute's coverage, Ark. Code Ann. § 4-75-101 makes an Arkansas non-compete enforceable if it is ancillary to employment, the employer has a protectable business interest, and the covenant is no broader in time and scope than necessary to defend that interest .
For agreements governed by the current statute, Arkansas is a permissible, enforce-if-reasonable state rather than a ban state. Ark. Code Ann. § 4-75-101 lists protectable interests, supplies a two-year duration presumption, allows no defined geographic restriction in some cases, and requires reformation of overbroad covenants. On a touch screen, a tap shows all 3 sources in this group. For a clause-by-clause pass over a specific agreement against these rules, the Arkansas non-compete reviewer checklist walks the full covenant suite item by item with each requirement's force level.
The effective-date line matters. Box treated Act 921 as effective July 22, 2015, and said the statute only arguably applied to the agreement executed after that date, while older agreements remained on the pre-Act common-law track .
Pre-2015 Arkansas cases do not supply the whole remedial rule for a covered covenant. They remain useful for the old common-law framework and reasonableness concepts, but current covered employment covenants start with § 4-75-101. On a touch screen, a tap shows all 2 sources in this group.
Sources for this answer
Ark. Code Ann. § 4-75-101 supports enforceability for an employment non-compete that is ancillary to employment, backed by a protectable business interest, and limited as to time and scope.
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) The covenant not to compete agreement is 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 Ark. Code Ann. § 4-75-101(a). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Ark. Code Ann. § 4-75-101 supports the statutory list of protectable business interests, including trade secrets, customer lists, goodwill, confidential information, training, and other valuable employer data.
For the purposes of subsection (a) of this section, the protectable business interest of the employer includes the employer's: (1) Trade secrets; (2) Intellectual property; (3) Customer lists; (4) Goodwill with customers; (5) Knowledge of his or her business practices; (6) Methods; (7) Profit margins; (8) Costs; (9) Other confidential business information that is confidential, proprietary, and increases in value from not being known by a competitor; (10) Training and education of the employer's employees; and (11) Other valuable employer data that the employer has provided to an employee that an employer would reasonably seek to protect or safeguard from a competitor in the interest of fairness.
See Ark. Code Ann. § 4-75-101(b). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Ark. Code Ann. § 4-75-101 supports mandatory reformation and enforcement of a covered overbroad covenant under reformed terms.
The court shall enforce the covenant not to compete agreement under the reformed terms and conditions.
See Ark. Code Ann. § 4-75-101(f). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Box supports the Act 921 effective-date framing for distinguishing agreements governed by the statute from agreements predating the Act.
Arkansas Code Annotated section 4-75-101 (Supp. 2015), which became effective on July 22, 2015, pursuant to the enactment of Act 921 of 2015.
See Box v. J.B. Hunt Transp., Inc., 2017 Ark. App. 605, 533 S.W.3d 603.
What makes an Arkansas non-compete reasonable or enforceable?
Under Ark. Code Ann. § 4-75-101, an Arkansas employment non-compete must protect a protectable business interest of the employer and be limited in time and scope no more than necessary to defend that interest. On a touch screen, a tap shows all 2 sources in this group.
The statute supplies the protectable-interest categories. They include trade secrets, intellectual property, customer lists, customer goodwill, business practices, methods, margins, costs, confidential business information, employee training and education, and other valuable employer data reasonably safeguarded from competitors .
Reasonableness is still contextual. The statute tells courts to consider the nature of the employer's protectable interest, the geographic scope of the business, whether a geographic limit is feasible, whether the restriction is limited to a specific customer or business group, and the nature of the employer's business .
Ordinary competition is not enough. Even before Act 921, Arkansas cases required a real protectable interest rather than a covenant designed only to eliminate competition, and the current statute keeps that interest requirement at the center. On a touch screen, a tap shows all 2 sources in this group.
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Ark. Code Ann. § 4-75-101 supports the core Arkansas reasonableness test for employment non-competes.
The covenant not to compete agreement is 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 Ark. Code Ann. § 4-75-101(a). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Ark. Code Ann. § 4-75-101 supports the statutory categories of protectable business interests.
For the purposes of subsection (a) of this section, the protectable business interest of the employer includes the employer's: (1) Trade secrets; (2) Intellectual property; (3) Customer lists; (4) Goodwill with customers; (5) Knowledge of his or her business practices; (6) Methods; (7) Profit margins; (8) Costs; (9) Other confidential business information that is confidential, proprietary, and increases in value from not being known by a competitor; (10) Training and education of the employer's employees; and (11) Other valuable employer data that the employer has provided to an employee that an employer would reasonably seek to protect or safeguard from a competitor in the interest of fairness.
See Ark. Code Ann. § 4-75-101(b). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Ark. Code Ann. § 4-75-101 supports the statutory reasonableness factors for assessing a covenant without a specific geographic limit.
The reasonableness of a covenant not to compete agreement shall be determined after considering: (A) The nature of the employer's protectable business interest; (B) The geographic scope of the employer's business and whether or not a geographic limitation is feasible under the circumstances; (C) Whether or not the restriction placed on the employee is limited to a specific group of customers or other individuals or entities associated with the employer's business; and (D) The nature of the employer's business.
See Ark. Code Ann. § 4-75-101(c). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Mercy supports the pre-Act Arkansas rule that a covenant cannot be used merely to prohibit ordinary competition.
Unless the covenantee has a legitimate interest to be protected by the agreement, the law will not enforce such a contract, as this would merely prohibit ordinary competition.
See Mercy Health Sys. of Nw. Ark., Inc. v. Bicak, 2011 Ark. App. 341, 383 S.W.3d 869.
Does an Arkansas non-compete need a geographic limit?
An Arkansas employment non-compete does not need a specific geographic limit, because Ark. Code Ann. § 4-75-101(c) provides that lacking one does not make the covenant overbroad if it is limited in time and scope no more than necessary to defend the employer's protectable business interest .
That is a major statutory shift from the old common-law risk. In Bendinger, the Arkansas Supreme Court rejected a covenant with no geographic limit because the facts did not justify it ; in NanoMech, the Eighth Circuit applied pre-Act Arkansas law to invalidate a no-geography, any-capacity covenant .
The current drafting point is practical rather than formalistic. If there is no geography, the covenant needs another limiting mechanism, such as customer scope, activity scope, or business-scope limits tied to the employer's protectable interest. On a touch screen, a tap shows all 2 sources in this group.
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Ark. Code Ann. § 4-75-101 supports the rule that lack of a specific geographic restriction does not itself make an otherwise reasonable covenant overbroad.
The lack of a specific or defined geographic descriptive restriction in a covenant not to compete agreement does not make the covenant not to compete agreement overly broad under subdivision (a)(2) of this section if the covenant not to compete agreement is 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 Ark. Code Ann. § 4-75-101(c). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Ark. Code Ann. § 4-75-101 supports considering business geography, feasible geographic limits, customer or entity scope, and the nature of the business.
The reasonableness of a covenant not to compete agreement shall be determined after considering: (A) The nature of the employer's protectable business interest; (B) The geographic scope of the employer's business and whether or not a geographic limitation is feasible under the circumstances; (C) Whether or not the restriction placed on the employee is limited to a specific group of customers or other individuals or entities associated with the employer's business; and (D) The nature of the employer's business.
See Ark. Code Ann. § 4-75-101(c). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Bendinger supports the pre-Act common-law geography problem for an overbroad employee covenant lacking an adequate limiting feature.
We hold that the failure of the covenant to contain a geographic restriction in this case renders it overbroad.
See Bendinger v. Marshalltown Trowel Co., 338 Ark. 410, 994 S.W.2d 468 (1999).
NanoMech supports the pre-Act federal application of Arkansas law invalidating a no-geography, any-capacity covenant.
Under the plain language of the agreement, Suresh would be prohibited from working for any company that is a competitor of NanoMech, in any capacity, anywhere in the world. Even though NanoMech’s proprietary interests warrant protection, the leading Arkansas authorities suggest that Suresh’s noncompete agreement unduly infringes on her ability to pursue work in her chosen field, and is therefore overbroad.
See NanoMech, Inc. v. Suresh, 777 F.3d 1020 (8th Cir. 2015).
How long can an Arkansas non-compete last?
Two years is presumptively reasonable under the statute, unless the particular facts clearly show that two years is unreasonable compared with the employer's protectable interest .
The presumption is not a safe harbor for every two-year clause. The statute ties duration back to the employer's protectable business interest, and Bud Anderson noted the older Arkansas damages treatise summary that one- and two-year limits had been upheld while three- and five-year limits had been unreasonable or invalid. On a touch screen, a tap shows all 2 sources in this group.
Two years is not automatic. The presumption is rebuttable and gives way to case-specific facts, so a two-year term measured against a narrow protectable interest or a broad work restriction can still be cut back or fail .
Sources for this answer
Ark. Code Ann. § 4-75-101 supports the two-year presumption and its case-specific exception.
A post-termination restriction of two (2) years is presumptively reasonable as to length of time under subdivision (a)(2) of this section unless the facts and circumstances of a particular case clearly demonstrate that two (2) years is unreasonable compared to the employer's protectable business interest.
See Ark. Code Ann. § 4-75-101(d). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Bud Anderson supports the Arkansas appellate discussion that historically one- and two-year limits had been upheld while three- and five-year limits had been unreasonable or invalid.
[W]hile the courts have upheld time limits of one year and two years, restrictions of three years and five years were unreasonable and invalid.
See Bud Anderson Heating & Cooling, Inc. v. Neil, 2018 Ark. App. 183, 545 S.W.3d 819.
Will an Arkansas court reform an overbroad non-compete?
An Arkansas court must reform an overbroad employment non-compete covered by Ark. Code Ann. § 4-75-101 to reasonable limits and then enforce it under the reformed terms. On a touch screen, a tap shows all 2 sources in this group.
That mandatory reformation rule is the watershed change from pre-Act Arkansas law. Under the old regime, the contract had to be valid as written, and the court would not narrow it to a reasonable version. On a touch screen, a tap shows all 2 sources in this group.
The temporal framing is important. Bendinger remains useful for the old all-or-nothing rule , as does NanoMech , and Box noted that the statute arguably applied only to an agreement executed after Act 921 took effect, without deciding the question . Those decisions should not be cited as current authority against mandatory statutory reformation for a covered post-Act employment covenant .
Mandatory reformation is a backstop, not a drafting license. For a covered post-Act covenant a court reforms only to the extent necessary — to the minimum lawful restraint the covenant could have been written to at the outset — and enforces the reformed terms, so an overbroad covenant is trimmed to that floor rather than to whatever scope the employer hoped to keep . The reformation duty also has hard edges: it does not reach an agreement on the pre-Act track, and for that agreement the older all-or-nothing rule controls, under which an overbroad restraint is void as written because an Arkansas court will not narrow it. On a touch screen, a tap shows all 3 sources in this group. A covenant drawn to a defensible scope on day one holds under either regime.
Sources for this answer
Ark. Code Ann. § 4-75-101 supports mandatory judicial reformation of an overbroad covered employment covenant to reasonable limits.
If restrictions in a covenant not to compete agreement are found to be unreasonable and impose a greater restraint than is necessary to protect the protectable business interest of the employer under subdivision (a)(1) of this section, the court shall reform the covenant not to compete agreement to the extent necessary to: (A) Cause the limitations contained in the covenant not to compete agreement to be reasonable; and (B) Impose a restraint that is not greater than necessary to protect the protectable business interest.
See Ark. Code Ann. § 4-75-101(f). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Ark. Code Ann. § 4-75-101 supports enforcement under the reformed covenant terms.
The court shall enforce the covenant not to compete agreement under the reformed terms and conditions.
See Ark. Code Ann. § 4-75-101(f). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Bendinger supports the pre-Act Arkansas rule that a restrictive covenant had to be valid as written and would not be rewritten by the court.
The court has held that the contract must be valid as written, and the court will not apportion or enforce a contract to the extent that it might be considered reasonable.
See Bendinger v. Marshalltown Trowel Co., 338 Ark. 410, 994 S.W.2d 468 (1999).
NanoMech supports the Eighth Circuit's pre-Act reading that Arkansas courts could not narrow an overbroad non-compete.
Under Arkansas law, a noncompete agreement must be valid as written; a court may not narrow it.
See NanoMech, Inc. v. Suresh, 777 F.3d 1020 (8th Cir. 2015).
Box noted that the statute arguably applied only to the agreement executed after Act 921 took effect, without deciding whether it applied.
However, in the present case the statutory law arguably applies only to the parties’ third restricted stock agreement executed in October 2015 after Act 921 became effective.
See Box v. J.B. Hunt Transp., Inc., 2017 Ark. App. 605, 533 S.W.3d 603.
Is continued employment enough consideration for an Arkansas non-compete?
Continued employment is enough consideration for an Arkansas non-compete, because Ark. Code Ann. § 4-75-101(g) states that an employee's continued employment is sufficient consideration for a covenant not to compete .
That means Arkansas does not require a separate bonus, promotion, equity grant, or new job offer for consideration when the statutory rule applies. The covenant still must satisfy the other statutory requirements, including protectable interest and reasonable time and scope. On a touch screen, a tap shows all 2 sources in this group.
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Ark. Code Ann. § 4-75-101 supports continued employment as sufficient consideration for an Arkansas employment non-compete.
An employee's continued employment is sufficient consideration for a covenant not to compete agreement.
See Ark. Code Ann. § 4-75-101(g). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Ark. Code Ann. § 4-75-101 supports the separate statutory enforceability requirements of protectable interest and reasonable time and scope.
The employer has a protectable business interest; and (2) The covenant not to compete agreement is 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 Ark. Code Ann. § 4-75-101(a). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Are physician and professional non-competes enforceable in Arkansas?
Physician practice restrictions are void under the current statute, and § 4-75-101 otherwise does not apply to covered Title 17 professional licensees except for that physician rule. On a touch screen, a tap shows all 2 sources in this group.
The physician ban was added by the 2025 amendment. The statute defines physician by reference to the Arkansas Medical Practices Act and osteopathy licensing provisions .
Older physician cases should be framed as pre-2025 public-policy and common-law context, not as the current statutory text. In Mercy v. Bicak, the Court of Appeals emphasized public access to physicians and affirmed summary judgment against enforcement of the physician non-compete. On a touch screen, a tap shows all 2 sources in this group.
A worker who holds a professional license under Arkansas Code Title 17, Subtitle 3 sits outside § 4-75-101 except for the physician voiding rule, so the statutory framework a covered covenant leans on — mandatory reformation, the continued-employment consideration rule, the two-year presumption, and the statutory irreparable-harm rule — does not govern that worker's competition covenants . Those covenants fall back to common-law reasonableness, where an overbroad restraint is not narrowed to a reasonable version but fails as written, so for a licensee the scope has to be defensible at signing rather than salvageable in court. Whether the worker holds such a license is the threshold question the exclusion turns on, and it is a fact about the worker rather than anything the covenant recites.
Sources for this answer
Ark. Code Ann. § 4-75-101 supports the statutory rule voiding a physician non-compete that restricts the physician's right to practice within scope.
A covenant not to compete agreement that restricts the right of a physician to practice within the physician's scope of practice is void.
See Ark. Code Ann. § 4-75-101(k). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Ark. Code Ann. § 4-75-101 supports the carve-out for professional licensees under Arkansas Code Title 17, Subtitle 3, except as provided by the physician rule.
Except as provided under subsection (k) of this section, this section shall not: (1) Be read to impair, limit, or change a party's protections and rights under the Arkansas Trade Secrets Act, § 4-75-601 et seq.; or (2) Apply to a person holding a professional license under Arkansas Code Title 17, Subtitle 3.
See Ark. Code Ann. § 4-75-101(j). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Ark. Code Ann. § 4-75-101 supports the statutory definition of physician for the physician non-compete ban.
As used in subdivision (k)(1) of this section, "physician" means a person authorized or licensed to practice medicine under the Arkansas Medical Practices Act, § 17-95-201 et seq., § 17-95-301 et seq., and § 17-95-401 et seq., and a person authorized to practice osteopathy under § 17-91-101 et seq.
See Ark. Code Ann. § 4-75-101(k). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Mercy supports the pre-2025 Arkansas public-policy concern with unduly restricting patient access to physicians.
Covenants not to compete are not looked upon with favor by the law; in fact, it is contrary to public policy to unduly restrict the [spublic’s right of access to the physicians of their choice.
See Mercy Health Sys. of Nw. Ark., Inc. v. Bicak, 2011 Ark. App. 341, 383 S.W.3d 869.
Mercy supports affirmance of summary judgment against enforcement of the physician covenant on the pre-Act record.
The circuit court did not err in granting partial summary judgment to Dr. Bicak on the eovenant-not-to-compete claim because Mercy did not counter the evidence demonstrating that it had no interest sufficient to warrant its enforcement; that it was designed only to eliminate competition; and that it would unreasonably interfere with the public’s right of access to the physicians of their choice and Dr. Bicak’s ability to earn a living.
See Mercy Health Sys. of Nw. Ark., Inc. v. Bicak, 2011 Ark. App. 341, 383 S.W.3d 869.
Does an Arkansas non-compete period toll or extend during breach or litigation?
An Arkansas court may be able to enforce a non-compete through a one-year prospective injunction running past the contract's restricted period, because the Arkansas Court of Appeals in Bud Anderson Heating & Cooling v. Neil treated that remedy as a contested point and declined to rule it out. On a touch screen, a tap shows all 2 sources in this group. Ark. Code Ann. § 4-75-101 authorizes damages and appropriate injunctive relief but does not expressly validate a contractual tolling-on-breach clause, so such a clause remains an open question .
The practical lesson is that Arkansas courts may keep a non-compete injunction dispute alive even after the stated period expires. Bud Anderson rejected a mootness dismissal where the employer sought an injunction running one year from the order and the record did not show that relief was impossible .
That is different from saying every contract clause that automatically extends the restricted period during breach is enforceable. The Arkansas statute speaks to damages, injunctive relief, irreparable harm, reformation, and enforcement under reformed terms, but it does not contain an express contractual tolling rule. On a touch screen, a tap shows all 2 sources in this group.
Tolling language operates as a risk allocation rather than as settled Arkansas law. Bud Anderson supports judicially fashioned prospective relief in the injunction posture; it does not squarely decide whether a private extension-on-breach clause is independently enforceable under § 4-75-101. On a touch screen, a tap shows all 2 sources in this group.
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Bud Anderson supports the availability question for a prospective injunction running beyond the contract's nominal one-year post-employment period in the non-compete injunction posture.
Therefore, it is not clear and obvious on the record before us that BAHC could not obtain the relief it seeks on appeal, a one-year prospective injunction.
See Bud Anderson Heating & Cooling, Inc. v. Neil, 2018 Ark. App. 183, 545 S.W.3d 819.
Ark. Code Ann. § 4-75-101 supports the statutory remedies and irreparable-harm language for breach of a covenant not to compete.
In a private court action, a court may award the employer damages for a breach of a covenant not to compete agreement, appropriate injunctive relief, or both, if appropriate.
See Ark. Code Ann. § 4-75-101(e). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Ark. Code Ann. § 4-75-101 supports the statutory reformation remedy for unreasonable restrictions.
The court shall enforce the covenant not to compete agreement under the reformed terms and conditions.
See Ark. Code Ann. § 4-75-101(f). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Bud Anderson treats whether an employer may obtain a prospective one-year injunction running past the contract's restricted period as a contested point of law, so the appeal was not dismissed as moot.
Neil's mootness argument hinges on the premise that BAHC cannot be awarded a prospective one-year injunction that extends beyond the one-year-from-date-of-termination period specified in the contract. This is a contested point of law on which it would be improper to dismiss BAHC's appeal as moot.
See Bud Anderson Heating & Cooling, Inc. v. Neil, 2018 Ark. App. 183, 545 S.W.3d 819.
What remedies are available for breach of an Arkansas non-compete?
For breach of an Arkansas non-compete, a court may award the employer damages, appropriate injunctive relief, or both, and Ark. Code Ann. § 4-75-101(e) treats the immediate harm from breach as irreparable for preliminary-injunction purposes. On a touch screen, a tap shows all 2 sources in this group.
Porter's applied that current statutory rule. The Court of Appeals reversed because the circuit court used only the common-law definition of irreparable harm and failed to apply § 4-75-101 in a case involving non-compete agreements executed after 2015. On a touch screen, a tap shows all 2 sources in this group.
The statutory irreparable-harm rule does not eliminate every injunction defense. Subsection e says the remedies language does not limit defenses to preliminary injunctive relief or the employer's right to monetary damages .
Sources for this answer
Ark. Code Ann. § 4-75-101 supports damages, appropriate injunctive relief, or both in a private action for breach of a covenant not to compete.
In a private court action, a court may award the employer damages for a breach of a covenant not to compete agreement, appropriate injunctive relief, or both, if appropriate.
See Ark. Code Ann. § 4-75-101(e). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Ark. Code Ann. § 4-75-101 supports treating immediate harm from breach as irreparable for preliminary-injunction purposes.
The immediate harm associated with the breach of a covenant not to compete agreement shall be considered irreparable to establish the appropriateness of a preliminary injunction.
See Ark. Code Ann. § 4-75-101(e). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Porter's supports applying the statutory irreparable-harm framework to breaches of non-compete agreements executed after 2015.
The grounds for establishing the right to an injunction are straightforward, but the analysis becomes layered in the context of allegations regarding breaches of noncompete agreements executed after 2015.
See Porter's Com. Refrigeration, Inc. v. Brewer, 2024 Ark. App. 232, 688 S.W.3d 145.
Porter's supports the rule that a party can establish statutory irreparable harm by showing immediate harm associated with breach of a post-2015 non-compete.
This means that a party seeking a preliminary injunction concerning a noncompete agreement executed after 2015 can establish irreparable harm by establishing immediate harm associated with a breach of the noncompete.
See Porter's Com. Refrigeration, Inc. v. Brewer, 2024 Ark. App. 232, 688 S.W.3d 145.
Ark. Code Ann. § 4-75-101 supports preserving other defenses to preliminary injunctive relief and monetary-damages rights.
This subsection does not limit: (A) Any other defense available to a party against a claim for preliminary injunctive relief; or (B) An employer's right to monetary damages for breach of a covenant not to compete agreement.
See Ark. Code Ann. § 4-75-101(e). (Acts 2015, No. 921, § 1; 2025, No. 232, §§ 1-3.)
Are sale-of-business non-competes judged differently in Arkansas?
Arkansas courts scrutinize a non-compete given in the sale of a business less strictly than an employment non-compete, because the Arkansas Supreme Court holds that employment covenants are subject to stricter scrutiny than covenants connected with a sale of a business .
Arkansas's covenant statute, Act 921 of 2015, governs employment covenants and excludes covenants ancillary to the sale or purchase of a business, leaving seller covenants to the common law. There, the Supreme Court draws an explicit line between the two settings: an employment covenant is scrutinized more strictly than one tied to a business sale .
A seller covenant still has to be reasonable in time and scope, and Arkansas does not blue-pencil an overbroad restraint — but it is reviewed less searchingly than the employment covenants this guide otherwise covers. A restraint tied to the goodwill actually sold is what survives that review .
Sources for this answer
The Arkansas Supreme Court holds that covenants not to compete in employment contracts are subject to stricter scrutiny than those connected with the sale of a business, confirming that seller covenants are judged less searchingly than employment covenants.
covenants not to compete in employment contracts are subject to stricter scrutiny than those connected with a sale of a business.
See Bendinger v. Marshalltown Trowel Co., 338 Ark. 410, 994 S.W.2d 468 (1999).
What does federal law require a non-compete or confidentiality agreement in Arkansas to say about whistleblowers and pay?
An employee confidentiality, non-compete, or invention assignment agreement signed or updated now that governs trade secrets or other confidential information must give the Defend Trade Secrets Act whistleblower-immunity notice, and for employees the National Labor Relations Act covers, Section 7 of that Act protects concerted activity, including joining together over pay and working conditions, that a broad confidentiality clause can restrict. The employer may satisfy the notice duty by cross-referencing a qualifying policy document provided to the employee, but an employer that omits the notice may not be awarded exemplary damages or attorney fees under the Defend Trade Secrets Act in an action against an employee who was not given notice.
The notice describes a federal immunity: an individual cannot be held liable under federal or state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal. For an agreement signed or updated now, the duty to give that notice reaches any agreement with an employee that governs trade secrets or other confidential information, whatever else the agreement does.
Section 7 gives employees the National Labor Relations Act covers a statutory right to engage in concerted activity for mutual aid or protection, including joining together to improve pay and working conditions. For employees the Act covers, the Board's work-rule standard adopted in 2023 makes a rule presumptively unlawful if it has a reasonable tendency to chill employees from exercising their Section 7 rights; an employer can rebut that presumption only by showing a legitimate and substantial business interest it cannot serve with a more narrowly tailored rule. The 2023 standard may change, but the Section 7 right it enforces is statutory. State law may add its own requirements for the same clauses.
A form carried over without the immunity notice, or a cross-reference to a reporting policy the employee never received, leaves the confidentiality clause without a valid notice, so the Act's exemplary damages and attorney fees are unavailable against that employee. A Confidential Information definition that sweeps in pay and working conditions with no carve-out exposes the employer to an unfair-labor-practice finding for employees the Act covers.
Sources for this answer
An individual is immune from criminal and civil liability under federal and state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal.
An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that— (A) is made— (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
See 18 U.S.C. § 1833(b)(1).
An employer must give notice of the trade-secret whistleblower immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
See 18 U.S.C. § 1833(b)(3)(A).
An employer complies with the notice requirement by cross-referencing a policy document, provided to the employee, that sets out the employer's reporting policy for a suspected violation of law.
An employer shall be considered to be in compliance with the notice requirement in subparagraph (A) if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for a suspected violation of law.
See 18 U.S.C. § 1833(b)(3)(B).
An employer that does not give the required notice may not be awarded exemplary damages or attorney fees in a trade-secret action against an employee who did not receive it.
If an employer does not comply with the notice requirement in subparagraph (A), the employer may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.
See 18 U.S.C. § 1833(b)(3)(C).
Section 7 gives employees the right to engage in concerted activities for mutual aid or protection, the statutory basis for keeping discussion of pay and working conditions outside confidentiality restrictions.
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title.
See 29 U.S.C. § 157 (NLRA § 7).
The National Labor Relations Board protects the right of private-sector employees, with or without a union, to join together to improve wages, benefits, and working conditions.
Established in 1935, the National Labor Relations Board is an independent federal agency that protects employees from unfair labor practices and protects the right of private sector employees to join together, with or without a union, to improve wages, benefits and working conditions.
See NLRB Office of Public Affairs, news release of Feb. 21, 2023 (agency mission statement).
Under the work-rule standard the Board adopted in 2023, a rule with a reasonable tendency to chill employees from exercising their Section 7 rights is presumptively unlawful unless the employer proves a legitimate and substantial business interest it cannot advance with a more narrowly tailored rule.
Under the new standard adopted in Stericycle, the General Counsel must prove that a challenged rule has a reasonable tendency to chill employees from exercising their rights. If the General Counsel does so, then the rule is presumptively unlawful. However, the employer may rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.
See Stericycle, Inc., 372 NLRB No. 113 (2023); NLRB Office of Public Affairs, Board Adopts New Standard for Assessing Lawfulness of Work Rules (Aug. 2, 2023).