Did you know that a single clause buried in your real estate or employment contract could prevent you from working in your city for a year or even longer? It is called a non-compete agreement, and if you are in business—whether you are an employer, employee, or independent contractor—this is something you cannot afford to ignore. Especially now, with a recent shake-up from the Federal Trade Commission (FTC) making big waves in the legal world.
What Exactly Is a Non-Compete Agreement?
A non-compete clause is a provision in an employment or contractor agreement that restricts an individual from working in a similar role or industry within a specified geographic area and for a specified period after they leave a company.
In real estate, for example, it might prevent an agent from contacting former clients or working with competitors in the same area. In the fitness world, it might block an instructor from opening a nearby gym and recruiting former clients. These clauses are intended to protect a business’s interests, but they come with strict limitations.
When Are Non-Compete Agreements Enforceable in Arizona?
In Arizona, non-competes are only enforceable if they are reasonable in time, geographic scope, and the type of activity being restricted. They also must protect legitimate business interests, such as proprietary information, confidential client lists, or unique training investments.
Even when drafted carefully, Arizona courts may use what is called the blue pencil rule to strike out any overly broad parts of the clause, leaving only the enforceable sections in place. So, even if a non-compete looks intimidating, it may not hold up in court.
The FTC’s Proposed Ban on Non-Competes: What You Need to Know
In 2024, the FTC proposed a nationwide ban on non-compete agreements for nearly all workers, a move that sent shockwaves through the business and legal communities. The rule was set to take effect in September, but then it hit a major legal roadblock.
A federal judge in Texas ruled that the FTC had overstepped its authority, and the rule’s enforcement was blocked nationwide. The FTC has since appealed the decision, but the outcome is still pending. To add even more uncertainty, the newly appointed FTC chair is not particularly supportive of broad regulatory action, so the final result remains uncertain.
So, What Does This Mean for You?
If you are an employer, this is a wake-up call. Relying solely on non-compete clauses could leave your business vulnerable. It’s crucial to shore up confidentiality and non-solicit agreements that are more likely to be upheld in court.
If you are an employee or contractor, this could be the light at the end of the tunnel. If a non-compete clause currently restricts you, you may have more options than you think. Depending on how the contract is written and your specific circumstances, the agreement might not even be enforceable.
Here’s What You Can Do Right Now
- Employers: Review your current contracts. Make sure your non-compete clauses are narrowly tailored and legally sound. Focus on building solid, enforceable protections around trade secrets and client relationships rather than relying on these measures.
- Employees: Do not assume your non-compete is ironclad. Understanding your agreement is the first step. It is possible that the clause would not stand up in court or that there are workarounds to keep your career moving.
Contact Provident Law for the Advice You Need
Non-compete agreements can serve as essential business tools—or become major roadblocks to your career. In a legal environment that is changing fast, you need more than vague assumptions or handshake deals. You need legal clarity and a strategy tailored to your situation.
Whether you are reviewing old contracts, drafting new ones, or dealing with a dispute, now is the time to understand your rights and protect your future. Contact Provident Law to schedule your consultation.