Non-Competes in Arizona

Are employee non-compete agreements enforceable in Arizona?

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 .

Unlike California, North Dakota, or Oklahoma, Arizona does not void employee non-competes by statute. The governing framework comes from the Arizona Supreme Court's decision in Valley Medical Specialists v. Farber and a line of Court of Appeals cases applying a fact-intensive reasonableness analysis.

“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.”

Because the analysis turns on the facts of each restraint, an employer cannot assume a covenant is enforceable just because the employee signed it. The sections below walk through the reasonableness test, the unusually strict rule against judicial rewriting, and the profession- and context-specific rules.

Sources for this answer

Case law · 1999-06-18

A.2 Valley Medical Specialists v. Farber

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.

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.

See Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (1999).

Case law · 1986-07-03

A.1 Amex Distributing Co. v. Mascari

Arizona courts disfavor restrictive covenants that tend to prevent a former employee from pursuing a similar vocation after employment ends.

Restrictive covenants which tend to prevent an employee from pursuing a similar vocation after termination of employment are disfavored.

See Amex Distributing Co. v. Mascari, 150 Ariz. 510, 724 P.2d 596 (Ct. App. 1986).

What makes a non-compete reasonable under Arizona law?

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.

The threshold question is always whether the employer has an interest worth protecting. Without one, the covenant fails no matter how narrowly it is drawn.

“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.”

In Hilb, Rogal & Hamilton Co. of Arizona v. McKinney, the Court of Appeals refused to enforce an anti-piracy covenant because the employer had no protectable interest in the particular account at issue.

“We hold that HRH had no protectable interest in the Bell Ford account.”

Even where an interest exists, reasonableness is measured against the burden on the employee.

“Hardship to the employee, however, is one of the factors to be considered in determining reasonableness.”

Sources for this answer

Case law · 1986-07-03

B.1 Amex Distributing Co. v. Mascari

Arizona enforces restraints that are no broader than the employer's legitimately protectable interests.

Reasonable restraints-those no broader than the employer's legitimately protectable interests-will be enforced in Arizona.

See Amex Distributing Co. v. Mascari, 150 Ariz. 510, 724 P.2d 596 (Ct. App. 1986).

Case law · 1986-07-03

B.2 Amex Distributing Co. v. Mascari

Hardship to the employee is a factor Arizona courts consider in determining whether a restraint is reasonable.

Hardship to the employee, however, is one of the factors to be considered in determining reasonableness.

See Amex Distributing Co. v. Mascari, 150 Ariz. 510, 724 P.2d 596 (Ct. App. 1986).

Case law · 1997-12-24

B.3 Hilb, Rogal & Hamilton Co. of Arizona v. McKinney

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.

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.

See Hilb, Rogal & Hamilton Co. of Arizona v. McKinney, 190 Ariz. 213, 946 P.2d 464 (Ct. App. 1997).

Case law · 1997-12-24

B.4 Hilb, Rogal & Hamilton Co. of Arizona v. McKinney

The Court of Appeals refused to enforce the covenant because the employer had no protectable interest in the account at issue.

We hold that HRH had no protectable interest in the Bell Ford account.

See Hilb, Rogal & Hamilton Co. of Arizona v. McKinney, 190 Ariz. 213, 946 P.2d 464 (Ct. App. 1997).

Will an Arizona court narrow or rewrite an overbroad non-compete?

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.

This is the single most important drafting fact about Arizona non-competes. In Varsity Gold, Inc. v. Porzio, the Court of Appeals reversed a trial court that had narrowed an overbroad covenant to save it.

“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.”

“In summary, we decide that the trial court erred by rewriting the restrictive covenant to render it reasonable and enforceable.”

Where the unreasonable language cannot be cleanly struck, the covenant is unenforceable as a whole. In Bryceland v. Northey, the court found the restraint unreasonably broad and not severable.

“Neither the contract itself nor other evidence in the record indicates that this unreasonable portion of the contract was severable.”

Drafting caution

Because an Arizona court will strike — not narrow — an overbroad covenant, draft duration, geography, and prohibited activity to the minimum the legitimate business interest actually requires, and use distinct, grammatically severable clauses so a single defect does not void the entire restraint. An overbroad covenant is more likely to fall entirely than to be trimmed by the court.

Sources for this answer

Case law · 2002-05-03

C.1 Varsity Gold, Inc. v. Porzio

Arizona courts may eliminate grammatically severable unreasonable terms but cannot add provisions or rewrite a restrictive covenant.

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.

See Varsity Gold, Inc. v. Porzio, 202 Ariz. 355, 45 P.3d 352 (Ct. App. 2002).

Case law · 2002-05-03

C.3 Varsity Gold, Inc. v. Porzio

The Court of Appeals held that the trial court erred by rewriting the covenant to render it reasonable and enforceable.

In summary, we decide that the trial court erred by rewriting the restrictive covenant to render it reasonable and enforceable.

See Varsity Gold, Inc. v. Porzio, 202 Ariz. 355, 45 P.3d 352 (Ct. App. 2002).

Case law · 1989-04-04

C.2 Bryceland v. Northey

Where the unreasonable portion of a covenant is not severable, the restraint is not enforced.

Neither the contract itself nor other evidence in the record indicates that this unreasonable portion of the contract was severable.

See Bryceland v. Northey, 160 Ariz. 213, 772 P.2d 36 (Ct. App. 1989).

What non-compete rules apply to physicians in Arizona?

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.

A reasonable physician covenant can still be enforced. The Court of Appeals in Phoenix Orthopaedic Surgeons, Ltd. v. Peairs rejected the argument that all physician non-competes are void as against public policy.

“We reject, however, Dr. Peairs' suggestion that all such covenants not to compete are unenforceable as against public policy.”

But Farber makes clear that the public's interest weighs heavily, and that close calls go against enforcement.

“In light of the great public policy interest involved in covenants not to compete between physicians, each agreement will be strictly construed for reasonableness.”

Practice caution

Treat a physician non-compete as enforceable only when it is narrowly tailored. Even a covenant that protects a real interest can fail if the restriction on the physician's practice harms patient access; in Farber the public-policy interest outweighed the employer's protectable interest.

Sources for this answer

Case law · 1999-06-18

D.1 Valley Medical Specialists v. Farber

Physician covenants not to compete are strictly construed for reasonableness because of the public policy interest involved.

In light of the great public policy interest involved in covenants not to compete between physicians, each agreement will be strictly construed for reasonableness.

See Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (1999).

Case law · 1999-06-18

D.2 Valley Medical Specialists v. Farber

The Arizona Supreme Court refused to enforce the physician covenant because public policy concerns outweighed the employer's protectable interests.

Public policy concerns in this case outweigh Valley Medical's protectable interests in enforcing the agreement.

See Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (1999).

Case law · 1989-11-27

D.3 Phoenix Orthopaedic Surgeons, Ltd. v. Peairs

Physician covenants not to compete are not all unenforceable as against public policy; a reasonable one can be enforced.

We reject, however, Dr. Peairs' suggestion that all such covenants not to compete are unenforceable as against public policy.

See Phoenix Orthopaedic Surgeons, Ltd. v. Peairs, 164 Ariz. 54, 790 P.2d 752 (Ct. App. 1989).

Can Arizona broadcast employees be required to sign non-competes?

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 .

This is a categorical prohibition, not a reasonableness test. The statute defines both who is covered and what counts as a prohibited clause.

“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.”

“‘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.”

Sources for this answer

Primary law

E.1 A.R.S. § 23-494

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.

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.

See A.R.S. § 23-494(A).

Primary law

E.2 A.R.S. § 23-494

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.

"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.

See A.R.S. § 23-494(B)(2).

Is continued employment enough consideration for an Arizona non-compete?

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 .

The leading statement is in Mattison v. Johnston, where the Court of Appeals upheld a covenant signed during an at-will relationship.

“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.”

A federal court applying Arizona law reached the same result in Compass Bank v. Hartley.

“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.”

Sources for this answer

Case law · 1986-09-16

F.1 Mattison v. Johnston

Continued at-will employment is sufficient consideration to support a restrictive covenant executed after employment has commenced.

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.

See Mattison v. Johnston, 152 Ariz. 109, 730 P.2d 286 (Ct. App. 1986).

Case law · 2006-04-28

F.2 Compass Bank v. Hartley

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.

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.

See Compass Bank v. Hartley, 430 F. Supp. 2d 989 (D. Ariz. 2006).

Are confidentiality and non-solicitation covenants treated as non-competes in Arizona?

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 .

The risk is greatest where a confidentiality clause has no time or geographic limit and reaches information that is not a trade secret.

“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.”

Drafting caution

Scope confidentiality and non-solicitation covenants to actual trade secrets and confidential information, with reasonable limits, rather than broadly restricting a former employee's use of general skills or knowledge. An open-ended confidentiality clause can be struck as a disguised non-compete and is subject to the same strict no-rewrite rule.

Sources for this answer

Case law · 2013-10-17

G.1 Orca Communications Unlimited, LLC v. Noder

An overbroad confidentiality covenant with no temporal or geographic limit is unenforceable as the equivalent of a geographically unrestricted non-compete.

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.

See Orca Communications Unlimited, LLC v. Noder, 233 Ariz. 411 (Ct. App. 2013).

Case law · 1997-12-24

G.2 Hilb, Rogal & Hamilton Co. of Arizona v. McKinney

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.

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.

See Hilb, Rogal & Hamilton Co. of Arizona v. McKinney, 190 Ariz. 213, 946 P.2d 464 (Ct. App. 1997).

How does the Arizona Uniform Trade Secrets Act interact with non-competes?

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.

AUTSA defines a trade secret by the familiar two-part test of independent economic value plus reasonable secrecy efforts.

“‘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.”

Crucially, the Arizona Supreme Court held in the Orca appeal that AUTSA does not wipe out common-law claims based on confidential information that does not rise to the level of a trade secret.

“We hold that AUTSA does not displace common-law claims based on alleged misappropriation of confidential information that is not a trade secret.”

A misappropriation claim has a three-year limitations period.

“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.”

Sources for this answer

Primary law

H.3 A.R.S. § 44-401

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.

"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.

See A.R.S. § 44-401(4).

Case law · 2014-11-19

H.4 Orca Communications Unlimited, LLC v. Noder

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.

We hold that AUTSA does not displace common-law claims based on alleged misappropriation of confidential information that is not a trade secret.

See Orca Communications Unlimited, LLC v. Noder, 236 Ariz. 180, 337 P.3d 545 (2014).

Primary law

H.1 A.R.S. § 44-407

A.R.S. § 44-407(A) provides that AUTSA displaces conflicting tort, restitutionary, and other state-law civil remedies for trade-secret misappropriation.

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.

See A.R.S. § 44-407(A).

Primary law

H.2 A.R.S. § 44-407

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.

Contractual remedies, whether or not based on misappropriation of a trade secret.

See A.R.S. § 44-407(B)(1).

Primary law

H.5 A.R.S. § 44-406

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.

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.

See A.R.S. § 44-406.

Are sale-of-business non-competes treated differently in Arizona?

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.

In Gann v. Morris, the Court of Appeals explained why sale-of-business covenants get more latitude than employment covenants.

“Where limited as to time and space, the covenant is ordinarily valid unless it is to refrain from all business whatsoever.”

“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.”

More latitude is not a free pass. In Berkadia Real Estate Advisors LLC v. Wadlund (D. Ariz. 2024), a federal court applying Arizona law refused to enforce a sale-of-business covenant whose activity, geographic, and duration limits swept further than the goodwill the buyer had acquired.

“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.”

Drafting caution

Tie a sale-of-business covenant's geography, duration, and scope of restricted activity to the goodwill actually being transferred. In Berkadia a nationwide covenant binding a seller who had only ever worked in Tucson was struck as unreasonable, and Arizona's no-rewrite rule meant the court would not pare it back.

Sources for this answer

Case law · 1979-03-29

I.1 Gann v. Morris

A sale-of-business covenant limited as to time and space is ordinarily valid unless it bars the seller from all business whatsoever.

Where limited as to time and space, the covenant is ordinarily valid unless it is to refrain from all business whatsoever.

See Gann v. Morris, 122 Ariz. 517, 596 P.2d 43 (Ct. App. 1979).

Case law · 1979-03-29

I.2 Gann v. Morris

A sale-of-business covenant is given latitude because the sale includes the business's goodwill, which the buyer is entitled to protect.

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.

See Gann v. Morris, 122 Ariz. 517, 596 P.2d 43 (Ct. App. 1979).

Case law · 2024-06-27

I.3 Berkadia Real Estate Advisors LLC v. Wadlund

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.

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.

See Berkadia Real Estate Advisors LLC v. Wadlund, No. CV-22-00049-TUC-CKJ, 2024 WL 4125533 (D. Ariz. June 27, 2024).

Does an Arizona non-compete period extend while the employee is in breach or litigation is pending?

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.

The uncertainty is structural. Arizona has no statute on point and no controlling case directly addressing judicial or contractual tolling of restrictive covenants. Two general rules shape the risk. First, the covenant's total effective duration — including any extension — is measured for reasonableness . Second, because an Arizona court will strike rather than narrow an unreasonable term, an aggressive extension clause that makes the effective period unreasonable risks taking the covenant down with it rather than being trimmed .

Drafting caution

If you include a clause extending the restricted period for the time the employee is in breach, draft the base period and the extension so that the combined duration is still reasonable on its own terms. Under Arizona's strict no-rewrite rule, a court that finds the extended period unreasonable is more likely to void the covenant than to shorten it.

Sources for this answer

Case law · 1999-06-18

J.1 Valley Medical Specialists v. Farber

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.

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.

See Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (1999).

Case law · 2002-05-03

J.2 Varsity Gold, Inc. v. Porzio

Varsity Gold states that Arizona courts may eliminate grammatically severable unreasonable terms but cannot add provisions or rewrite a restrictive covenant.

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.

See Varsity Gold, Inc. v. Porzio, 202 Ariz. 355, 45 P.3d 352 (Ct. App. 2002).

Can a non-signatory enforce a forum-selection clause in an Arizona contract dispute?

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 .

This matters for covenant disputes, where a party often tries to invoke a contract's forum-selection clause for the benefit of someone who never signed the agreement.

“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.”

Sources for this answer

Case law · 2025-11-28

K.1 Henderson v. Moskowitz

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.

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.

See Henderson v. Moskowitz (Ariz. Nov. 28, 2025).

Can an employer use another state's law to make an Arizona non-compete easier to enforce?

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.

In Pathway Medical Technologies, Inc. v. Nelson, the employer's agreement selected Washington law, which is friendlier to non-competes — including allowing courts to rewrite an overbroad covenant. Applying the Restatement (Second) of Conflict of Laws § 187, the court treated that as an attempt to escape Arizona's policy.

“Arizona law does not approve of broad non-compete provisions.”

“the Agreement's choice of Washington law likely is not enforceable under Restatement section 187(2)(b).”

Drafting caution

Do not rely on a sister-state choice-of-law clause to obtain a more lenient non-compete rule or judicial reformation for an Arizona-centered employment relationship. Where Arizona has the most significant relationship, a court may apply Arizona law — including its strict no-rewrite rule — regardless of the contract's chosen law.

Sources for this answer

Case law · 2011-09-30

L.1 Pathway Medical Technologies, Inc. v. Nelson

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.

Arizona law does not approve of broad non-compete provisions.

See Pathway Medical Technologies, Inc. v. Nelson, No. CV11-0857-PHX-DGC, 2011 WL 4543928 (D. Ariz. Sept. 30, 2011).

Case law · 2011-09-30

L.2 Pathway Medical Technologies, Inc. v. Nelson

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.

the Agreement's choice of Washington law likely is not enforceable under Restatement section 187(2)(b).

See Pathway Medical Technologies, Inc. v. Nelson, No. CV11-0857-PHX-DGC, 2011 WL 4543928 (D. Ariz. Sept. 30, 2011).

Who pays attorney fees in an Arizona non-compete lawsuit?

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 .

“In any contested action arising out of a contract, express or implied, the court may award the successful party reasonable attorney fees.”

Sources for this answer

Primary law

M.1 A.R.S. § 12-341.01

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.

In any contested action arising out of a contract, express or implied, the court may award the successful party reasonable attorney fees.

See A.R.S. § 12-341.01(A).

What are the recent developments in Arizona non-compete law?

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.

Both bills used the same operative language, which would have replaced Arizona's case-by-case reasonableness analysis with a flat prohibition for most employees.

“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.”

Key developments:

2026: HB 2361 was introduced, proposing A.R.S. § 23-207 — a statewide ban on employer non-competes — but it has not been enacted .
2025: HB 2589, a near-identical statewide ban, was introduced and likewise has not been enacted .

Because neither ban has become law, an Arizona non-compete is still governed by the reasonableness and strict no-rewrite rules described above, not by any statutory ban outside the broadcast-employee context.

Sources for this answer

Primary law · 2026-01-20

N.1 Arizona HB 2361 (2026)

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.

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.

See Ariz. H.B. 2361, 57th Leg., 2d Reg. Sess. (2026).

Primary law · 2025-01-27

N.2 Arizona HB 2589 (2025)

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.

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.

See Ariz. H.B. 2589, 57th Leg., 1st Reg. Sess. (2025).