How Long Do Non Competes Last in Arizona?

How long can a non-compete last in Arizona? Well, unfortunately, there is no single statute or code that lists a bright line amount of time for a non-compete in Arizona. There have been a few cases that have dealt with non-compete for physicians. And the court in those cases stated that one year was a reasonable amount of time for a non-compete. However, as I said before, it has not been enacted into law. So, when a court is looking at whether a non-compete is reasonable in Arizona, it looks at several factors. First, the scope of the non-compete, meaning what is it stopping the professional from doing? For a physician, it will most likely be the specialty that that physician is utilizing for a specific employer.

Scope of the Non-Compete Agreement

If you’re in sales, for instance, it may say you cannot practice in sales in the industry of whoever you’re working with. That is one way that an employer can get sneaky in keeping the scope as broad as possible. And I’ll give an example. Let’s just say you’re a salesperson and you’re working for a software company. You don’t want the non-compete to say you can’t work in sales for one year and within Maricopa County or something like that. You want it to say you can’t work in computer sales and even better, whatever the specific thing that you’re selling for that individual employer. And for a physician, for instance, let’s say you’re an internal medicine physician. You can do primary care, you can do urgent care, you could do ED, you could be a hospitalist. You don’t want the non-compete to state you can’t practice medicine at all.

Duration of Non-Compete Agreements in Arizona

You want it to state you can’t practice as a hospitalist, for instance, if you’re working as a hospitalist for an employer. So, keeping the scope narrow is important. Now, the length of time, which is the point of this blog. Most non-competes would be considered reasonable and enforceable that is one year in length. It’s not uncommon for some employers in Arizona to push it out to two years. Anything beyond that, I do not think would be enforceable, and anything between one to two years also is on the edge. But it’s not just if one section is completely unenforceable, the entire thing would be unenforceable. They look at the totality of the non-compete agreement. So, is it a very narrowly tailored scope? Maybe it’s 18 months and then maybe the geographic restriction is very small compared to normal.

Geographical Scope of the Non-Compete

And then a court may say, okay, well, that’s reasonable. The aim is for no more than one year and no more than two years. For any of my healthcare-related clients, one year is the max that we’ll agree to. And then last is the geographic scope. This really is dependent upon what you’re doing. For healthcare providers, five to 10 miles from your primary practice location would be considered reasonable. However, if you’re in sales, certainly five to 10 miles would not be the geographic limitation for you. It would most likely be either by county or even by large sections of the entire state. Sometimes they’re statewide as well. It just depends. The specific industry that you’re in will dictate whether the geographic scope is considered reasonable or not.

Negotiating the Non-Compete Agreement

Now, how do you negotiate? Well, obviously you need to do it before you sign the employment agreement or independent contractor agreement. I find that some employers will state, you know what, just sign this. We’ll never enforce it, don’t worry about it. Or sign it, and then we’ll negotiate it upon the termination of the agreement. Obviously, don’t do that. Never take the word of the employer. You need to negotiate it in advance of signing. And then, you need to figure out what is going to work best for you. If you want to decrease the mileage from, let’s say 10 to five miles, well, figure out, are there opportunities in that five-mile ban? If there aren’t, then you need to focus on other parts of it, either narrowing the scope or narrowing the time. Every individual is different, and their needs are different.

So, you need to identify, alright, this is exactly what I need if I must sign a non-compete agreement to make this job worthwhile. Can an employer force you to sign a non-compete at all? Yes, they can. They can make it a contingent part of the agreement. And if you do not agree to sign the non-compete, then it’s extraordinarily likely that they’re just going to move on and find somebody else who wants to sign the non-compete. But no matter what, no job is worth it if the non-compete is really going to put a, I guess, hardship upon the professional. Meaning, let’s say you have established ties to the area, you grew up here, you have family here, and you absolutely cannot move once the contract is terminated. That could be the absolute number one thing that you attempt to negotiate when looking at the agreement, it could even be more important than compensation. Once again, the professional dictates what is most important. Hopefully, that was helpful. A little breakdown of how long, an average non-compete can be in Arizona.

Can a Non-Compete Prevent You From Working?

Can a non-compete agreement prevent you from working? What is a non-compete? A non-compete generally is a part of the employment contract that a professional signs before starting employment. A non-compete is considered a restrictive covenant. And that means it will prohibit the professional from doing something during or after the contract is terminated. As far as a non-compete goes, a normal non-compete will stop a professional from doing some specific work for a period within a specific geographic region. And I’ll give you an example. Let’s say you’re a cardiologist. The non-compete would say the physician can’t practice in cardiology for one year after the contract terminates within 15 miles of their primary office location. That would be a normal non-compete for a doctor. Now, in sales, it’s going to be a little broader.

When You’re Working on Sales The Non-Compete is Broader

So, let’s say you’re in software sales. It may tell you can’t work in software sales for two years within the Southern half of Ohio, for example, something like that. Sales non-competes are much broader than those for healthcare workers. Whether it can prevent you from working, it can avoid whatever is listed as far as the scope is in the non-compete. So, for instance, as I said before if you’re a cardiologist, you may say you cannot practice medicine within this. 

Now, for a cardiologist, you can usually only do one thing, but let’s take internal medicine. An internal medicine physician could do primary care or urgent care, they could do emergency department work, and they could be a hospitalist. So, suppose you have a contract that states something broader than what you’re doing specifically for the employer. In that case, you want to get that narrowed down. Suppose someone was just a hospitalist for a hospital. 

In that case, you want the contract to say you can’t practice as a hospitalist, not in internal medicine. And for sales, let’s take the software as an example. It should tell you that you can’t practice as a software salesperson within 10 miles in one year, whatever. It should not say you can’t work in sales at all. That would, I think, be completely unenforceable, most likely. Now, there are a handful of states where non-competes are entirely unenforceable, so you need to check and see if you’re in one of those states.

Reasonable Standard for Non-Compete

You are likely in a state where it is enforceable. And so, what does the court look to when deciding whether to enforce a non-compete agreement or not? Well, it’s a reasonable standard. Does it prevent the person from working completely or just in what they were doing for the employer? Is the time limit fair? Is that one year, which would be reasonable? Or is it five, which would not be? As I said, the physician is 10 to 15 miles from the primary practice location versus 150 miles. 

There will be a sweet spot where a court will say, alright, that’s the right length with the proper geographic restriction and scope. And there may be times where one of those is way off. And suppose the professional wanted to fight it. In that case, the judge may not invalidate the non-compete completely. Still, they may kick down whatever the unreasonable part is to an area where they would think it is reasonable.

Can an Employer Prevent You from Working?

Now, one thing to consider, this should only apply to what you’re doing for the employer. So, if you’re in sales for somebody, they can’t say you can’t work at all doing anything. Or, as I said before, if you’re a physician, you can’t know you can’t have any job within this area. Suppose it was something unrelated to what you were doing for that employer. In that case, that is not something the employer can or should be able to prohibit you from doing. So, you need to look at three things before you sign non-compete agreements: keeping the scope as narrowly tailored as possible. Precisely what you’re doing for that employer, and keeping the length as short as possible. Anywhere between one to two years is an average amount. Anything above that would be considered unreasonable.

Geographic Restriction 

And then, regarding the geographic restriction, this will depend upon what industry you’re in and where it’s located. Ten miles in New York City could knock out thousands of opportunities, whereas 10 miles in a rural city in Idaho could knock out one opportunity. So, that must be taken to account as well. Where are you specifically located? And then, how many job opportunities will the geographic restriction stop you from moving forward? Non-competes are tricky. 

They certainly can be one of the highest priority things to negotiate when you’re looking at signing an employment agreement. If someone has ties to a community, their kids are in school, their family there, and there’s no way they can move after the contract terminates. Non-compete could be the absolute most crucial thing. If someone’s moved into a community specifically for a job, they may not care and say, well, I’ll move if this job doesn’t work out. Therefore their non-compete doesn’t matter at all.

Advice from an Arizona Attorney

However, one word of advice, do not sign a non-compete, just expecting it not to be enforced. As I tell almost any client, you must be willing to go through whatever you ultimately sign. Even if we think it won’t be enforceable, you may have to litigate or go to arbitration to get there, which most people don’t want to do. So, make sure that you negotiate in advance. I just had a doctor last week come to me. And the employer said, well, we want you to sign this non-compete. Still, in the past, they’ve amended it after the relationship has ended. And I said, look, that’s just hollow talk. There’s nothing to hold them to that if you sign the non-compete, and you should not rely upon their word that they will change it after the fact. It just doesn’t make any sense to me.