Getting ahead in the business world can involve selling more goods and services than your competitors, holding more market share than your rivals, and landing advantageous contracts with other companies. To do this, it’s often incredibly important for businesses to keep their practices and strategies to themselves.
In order to protect themselves from the possibility of spilled secrets and competing employees, employers have the right to ask employees to sign noncompete and nonsolicitation agreements. While these agreements are beneficial to the employer, employees need to understand what their contract says and what their rights and obligations are, especially if they’re leaving their position or being terminated.
If you have been presented with a noncompete or nonsolicitation agreement, or you’ve been accused of violating one, legal help is available. Contact a Little Rock noncompete and nonsolicitation agreement lawyer at your earliest convenience to see what assistance may be an option. If you’re in this situation, it’s also important to understand what the terms of the agreements are, the laws that protect businesses, the legal right afforded to you.
What Are Noncompete and Nonsolicitation Agreements?
Noncompete and nonsolicitation agreements play a vital role in protecting intellectual property from competitors. That being said, these contracts are often so restrictive they deny a separated employee the ability to make a living and unfairly limit a current employee’s ability to test the labor market. Keep reading to learn about the specifics of each agreement type.
A noncompete agreement is a contract between an employee and an employer that prohibits the employee from going to work for a competing business or starting one of their own. While the laws vary by state, most states will enforce a noncompete agreement if it complies with the following requirements:
- The employer has a legitimate need for an employee to sign a noncompete agreement that revolves around protecting the business’s interests.
- Both parties must get something out of the agreement.
- The contract expires within a reasonable amount of time – normally six months to two years after the employee has left.
- The geographic scope is reasonable and well-defined.
- The agreement does not severely limit the type of work a former employee can look for.
A nonsolicitation agreement is typically a part of a noncompete agreement; however, it can stand as its own contract. This type of contract prohibits an employee from soliciting a company’s clients or customers for their own benefit, or the benefit of a competitor, after leaving the company. These are commonly used in service or sales businesses where the customer pool is limited.
To be enforceable, the agreement must be in place for valid business reasons, there must be a customer pool worth protecting, and the employee must be able to leave their position voluntarily, at any time.
How Does Arkansas Law Protect Businesses?
Arkansas’ General Assembly established Act 921 in 2015. This act has changed the way state courts look at noncompete and nonsolicitation agreements and identifies the following as protectable interests of any business:
- Business Methods
- Confidential business information
- Customer goodwill
- Customer lists
- Employee training methods
- Intellectual property
- Knowledge of customer business practices
- Profit margins
- Trade secrets
If a former employee is suspected of violating a noncompete agreement, an employer has the right to file a lawsuit seeking an injunction to force the employee to comply with the agreement and pay an award for money damages, including loss of profits. Former employees who steal trade secrets are also liable under federal law.
What Are the Legal Protections of a Former Employee Accused of Breaching an Agreement?
If you have been accused of breaching a noncompete or nonsolicitation agreement, an experienced attorney can help you rely on a variety of defenses to prove you remained compliant with the terms of the agreement. The following are some of the most common defenses:
Nonbreach. A nonbreach defense presents the employee as using common knowledge from their industry to find work, as opposed to sharing specific employer information.
Employer Breach. The agreement may be void is the employer breached the contract first.
Unclean Hands. The agreement may be unenforceable if an employee is leaving as a result of harassment or discrimination.
Illegitimate or Overly Restrictive Contact. If the contact is found to not be compliant with Act 921, it will likely be unenforceable. This may also be the case if the agreement is deemed unreasonable because of its timespan or geographical area.
Bad Faith Termination. Any agreement may be unenforceable in the event your employer terminated you in bad faith.
Contacting an Employment Lawyer for Help With Noncompete and Nonsolicitation Agreements
If you’ve been accused of breaching a noncompete or nonsolicitation agreement in Arkansas, an experienced employment law lawyer can help you understand your rights. You may consider contacting one of our McMath Woods P.A., attorneys prior to signing an agreement, when you know you’re leaving your position, if you have any questions regarding what may be interpreted as a violation of your agreement, or if you have been accused of violating your agreement.
To set up a free consultation and review of your contract and case, contact us online today. We are ready to provide you with any advice you may need, as well as protect your rights as an employee in the event the case is taken to court.