Employee Restrictive Covenant Agreement
Cover Terms
The terms below are incorporated into and form part of this agreement.
| Employer | [Legal name of the entity that employs the employee] | ||||||||
| Employee | [Full legal name of the employee] | ||||||||
| Employee Title / Position | |||||||||
| Effective Date | [Effective date of this agreement — the date the last party signs. It anchors the duration presumptions stated in Cover Terms.] | ||||||||
| Governing Law | Arizona | ||||||||
| Confidentiality | |||||||||
| Trade Secrets Duration | Perpetual | ||||||||
| Other Confidential Information Duration | 24 months | ||||||||
| Employee Non-Solicitation | |||||||||
| Duration | 24 monthsMarket benchmark HideShow
Why this selected default?Why is this the selected default?24 months matches the modal employee non-solicit term observed in benchmarked, publicly-filed employee agreements; 12 months is the common lighter alternative. The Act sets no express duration presumption for the no-hire category, so the uniquely-essential scope limit does the primary category work; counsel should size the term to the workforce interest actually protected. Showing 3 representative examples. Company names link directly to the underlying SEC filing.
Showing 3 representative examples. Company names link directly to the underlying SEC filing.
Showing 3 representative examples. Company names link directly to the underlying SEC filing.
Showing 3 representative examples. Company names link directly to the underlying SEC filing. See all 3 examples in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark → | ||||||||
| Customer Non-Solicitation | |||||||||
| Duration | 12 monthsState-law basis 12 monthsReference only — not part of this agreement. 12 months sits well inside the presumptively reasonable window for a current-customer non-solicit: eighteen months, or for as long as post-separation consideration is paid, whichever is greater. Counsel may extend toward eighteen months, or longer while post-separation consideration is paid, where the interest supports it. | ||||||||
| No Business with Covered Customers | |||||||||
| Duration | 12 monthsState-law basis 12 monthsReference only — not part of this agreement. 12 months sits within the current-customer window. Because non-dealing has no category of its own, it is drawn to fit inside the current-customer non-solicit exception, and its duration tracks that category's presumption. | ||||||||
| Non-Investment | |||||||||
| Duration | 12 months | ||||||||
| Non-Disparagement | |||||||||
| Duration | 24 months |
Standard Terms
1. Defined Terms
“Competitive Business” means the business activities described in Cover Terms under Competitive Business.
“Confidential Information” means non-public information relating to Employer's business, including trade secrets, customer lists, pricing, business processes, technical data, and strategic plans, but excluding information that becomes public through no fault of Employee.
“Covered Customers” means customers, vendors, referral sources, and business partners with whom Employee had material contact or for whom Employee had responsibility during the 12 months before termination of employment.
“Covered Employees” means employees with whom Employee worked or whom Employee managed during the 12 months before termination of employment.
“Passive Public Holdings” means ownership of securities of a publicly traded company representing less than five percent of any class of such company's securities, and interests in diversified mutual funds, index funds, and exchange-traded funds that may hold securities of a Competitive Business.
“Protected Interests” means Employer's Protected Interests, including its Confidential Information, its Trade Secrets, and its goodwill in its customer, vendor, referral-source, and business-partner relationships.
“Restricted Period” means the duration specified in Cover Terms for each covenant, beginning on the date Employee's employment with Employer ends for any reason.
“Restricted Territory” means the geographic area described in Cover Terms under Restricted Territory.
“Solicit” means to directly or indirectly contact, approach, induce, encourage, or provide Confidential Information to any person or entity for the purpose of diverting business away from Employer, but does not include responding to general advertisements or unsolicited inquiries not initiated by Employee.
“Trade Secrets” means information that qualifies as a trade secret under applicable law.
2. Recitals and Protectable Interests
Employer and Employee acknowledge that each restrictive covenant in this agreement is ancillary to a valid employment relationship. Employee will receive access to Employer's Confidential Information and Trade Secrets and will develop customer relationships and goodwill on Employer's behalf, and each covenant is included to protect those Protected Interests and not to restrain ordinary competition. Employer would not provide Employee with access to the Protected Interests absent the protections in this agreement. Employer and Employee agree that each covenant is no greater than necessary to protect Employer's Protected Interests and is reasonable in time, territory, and scope of restricted activity, and the parties intend each covenant to be enforceable as written.
Drafting Note Third-party notices ride on covenant enforceability
A clause permitting the employer to notify a prospective employer or business associate of the agreement on a reasonable belief of breach is not free-standing. Arizona treats these restraints as disfavored, and a restriction greater than necessary to protect the employer's legitimate interest — or one that interest cannot outweigh against hardship to the employee and likely injury to the public — will not be enforced . A notice built on a covenant that later fails that analysis can expose the employer to a claim, so a notice provision reaches only as far as the underlying restraint, which stands only where it is no broader than necessary to protect its Protected Interests.
Drafting Note Protectable interest comes first
Each covenant in the family — non-compete, non-solicit, non-dealing, non-investment — depends on the legitimate business interest it protects. Arizona has no general non-compete statute and no statutory safe harbor: each covenant is enforceable only so long as it is no broader than necessary to protect that interest, and the interest inquiry is the threshold, so a covenant fails where the employer has no protectable interest in the relationship restrained . Hardship to the employee is weighed in the same analysis, so no acknowledgment, consideration recital, or irreparable-harm stipulation rescues an unreasonable restraint . Two things carry through the rest of the agreement: real Specified Competitors named in Cover Terms are strong evidence the restraint is no greater than necessary; and an assignee inherits the analysis unchanged — whoever enforces a covenant must show its own protectable interest behind the restraint, because an assignment moves the covenant without strengthening it. A non-investment covenant aimed at active or material participation in private competitors, resting on the passive-public-holdings carve-out, stays tied to the interest rather than to ordinary investing.
Drafting Note Consideration supports a covenant but does not make it reasonable
A covenant an existing at-will employee signs after employment has commenced needs no separate payment, raise, or promotion — continued at-will employment is itself sufficient consideration . Adequate consideration establishes only that the covenants are supported, not that they are reasonable; each covenant must still independently satisfy the reasonableness analysis on time, territory, and scope.
Drafting Note Non-solicits and non-dealing face the same test as non-competes
A non-solicit does not escape scrutiny because it is labeled something lighter than a non-compete. Arizona runs anti-piracy covenants through the same no-broader-than-necessary test, so even the employee non-solicit — the lightest restraint in the family — reaches only covered employees during the restricted period, and the customer non-solicit reaches only as far as the employer's protectable interest in the specific customer relationships extends . Arizona also classifies covenants by functional effect rather than label, so the optional non-dealing clause — which bars serving covered customers even when the customer approaches first — draws the full reasonableness analysis and stands only when sized tightly to the goodwill it protects, because it sits closer to a non-compete than to a non-solicit . A tightly drawn customer non-solicit backstopped by the confidentiality and trade-secret protections is often a stronger and more readily enforceable protection than a broad non-compete.
3. Broadcast Employers
Employer represents that it does not provide broadcasting services over a television or radio station or network. If Employer does provide such broadcasting services, no non-competition covenant in this agreement applies to Employee.
Drafting Note The broadcast-employee ban
Any non-competition covenant depends first on whether the employer is a broadcast employer. Where the employer provides broadcasting services over a television or radio station or network, a required non-compete is unlawful: A.R.S. § 23-494 makes it unlawful, as a condition of employment, for a broadcast employer to require a current or prospective employee to agree to a noncompete clause, defined as a clause prohibiting work in a specific geographic area for a specific period after leaving the broadcast employer . This is Arizona's one categorical statutory non-compete ban, and it settles the covenant before any reasonableness analysis reaches the remaining terms.
4. Timing, Consideration, and Employee Acknowledgements
This agreement is effective as of the Effective Date listed in Cover Terms. The parties acknowledge that this agreement is supported by adequate consideration: if this agreement is signed at the outset of employment, the offer and commencement of employment; if Employee is an existing at-will employee, Employer's continuation of the at-will employment relationship in exchange for Employee's assent to the covenants in this agreement. Employee acknowledges having had the opportunity to consult with independent legal counsel before signing this agreement, and that the restrictions in this agreement are reasonable and necessary to protect Employer's Protected Interests.
5. Confidential Information and Trade Secret Protection
Employee must treat all Confidential Information as strictly confidential. Employee must not use or disclose Confidential Information except as required to perform authorized job duties or with Employer's prior written consent. Employee's obligations regarding Trade Secrets continue for the period specified in Cover Terms under Trade Secrets Duration, for as long as the information remains a Trade Secret. Employee's obligations regarding other Confidential Information continue for the period specified in Cover Terms under Other Confidential Information Duration. This confidentiality obligation operates alongside, and independent of, the other covenants in this agreement, and does not restrict Employee's use of the general knowledge, skill, and experience Employee acquired during employment.
Drafting Note De facto noncompetes
A confidentiality or non-solicitation covenant scoped to actual trade secrets and confidential information, with reasonable limits, stays clear of the line; one that broadly restricts a former employee's use of general skills or knowledge does not. An open-ended confidentiality clause can be struck as a disguised non-compete and is subject to the same strict no-rewrite rule .
Drafting Note Confidentiality scope under AUTSA
A confidentiality clause scoped to defined Confidential Information and Trade Secrets with the durations set in Cover Terms, backed by return, deletion, and certification steps, supplies the reasonable secrecy efforts AUTSA requires — a trade secret earns protection only through independent economic value from secrecy plus efforts reasonable under the circumstances to maintain it — so a dated, retained certification is part of what the protection rests on . A misappropriation action must be brought within three years of when the misappropriation is or reasonably should have been discovered, another reason the dated certification matters . The Act displaces conflicting civil remedies for trade-secret misappropriation but expressly preserves contractual remedies whether or not based on misappropriation, so the covenant claims run alongside any statutory claim and a tightly scoped clause loses nothing the law would otherwise give .
6. Permitted Disclosures and Protected Conduct
Nothing in this agreement prohibits Employee from: (a) reporting possible violations of law to any government agency, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other federal, state, or local agency; (b) making disclosures protected under whistleblower provisions of any law; (c) discussing wages, hours, or other terms and conditions of employment as protected by applicable law; (d) testifying truthfully in legal proceedings; or (e) filing a sealed complaint in court using Confidential Information without liability. Pursuant to the Defend Trade Secrets Act (18 U.S.C. § 1833(b)), Employee may not be held criminally or civilly liable for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed court filing.
7. Return, Deletion, and Certification of Company Property
Upon termination of employment, Employee must promptly return to Employer all documents, devices, files, credentials, and other materials containing or relating to Confidential Information. Where permitted, Employee must permanently delete electronic copies of Confidential Information from personal devices and accounts. Employee must certify compliance with this section in writing upon Employer's request.
8. Non-Solicitation of Employees
During the Restricted Period, Employee must not Solicit, recruit, hire, or attempt to hire any Covered Employee. This restriction does not prohibit Employee from providing a professional reference upon request or from hiring a person who responds to a general advertisement not directed specifically at Employer's employees.
9. Non-Solicitation of Customers, Vendors, Referral Sources, and Business Partners
During the Restricted Period, Employee must not Solicit the business of any Covered Customer.
10. No Business with Covered Customers
During the Restricted Period, Employee must not accept, service, or do business with any Covered Customer, regardless of whether Employee or the Covered Customer first initiated contact.
11. Non-Investment
During the Restricted Period, Employee must not acquire or hold any active ownership interest in, serve as a director, officer, manager, or advisor to, or have material economic participation in any Competitive Business. Passive Public Holdings are permitted.
12. Non-Disparagement
During the Restricted Period specified in Cover Terms for Non-Disparagement, Employee must not make statements that are intended to or reasonably likely to disparage Employer, its officers, directors, employees, products, or services. This section does not restrict Employee from making truthful statements in legal proceedings, providing truthful testimony, making disclosures to government agencies, or exercising rights protected by applicable law.
13. Physician and Health Care Practitioner Covenants
If Employee is a physician or other licensed health care practitioner, each covenant restraining Employee from practicing Employee's profession is confined to the Restricted Territory and Restricted Period stated in Cover Terms. No covenant prohibits Employee from continuing care for an existing patient or responding to a medical emergency.
Drafting Note Physician covenants under strict construction
A physician clause survives here only where the practice restraint is confined to a narrow radius and a short term, drawn to preserve patient access and continuity of care. Physician covenants are not categorically void — Arizona rejects the argument that all physician non-competes are unenforceable as against public policy — but each one is strictly construed for reasonableness in light of the great public policy interest involved, and where the public interest in patients' ability to choose their doctor outweighs the employer's protectable interest, the covenant is not enforced . No enacted Arizona statute bans health-care non-competes, so the reasonableness limit — not any statutory cap — controls the radius and term.
14. No Conflicting Obligations
Employee represents that performing duties for Employer and complying with this agreement does not conflict with any prior agreement, court order, or legal obligation binding on Employee. Employee must promptly disclose to Employer any potential conflict that arises during employment.
15. Notice to Future Employers and Other Third Parties
Employer may disclose the existence and terms of this agreement to any prospective employer or business associate of Employee if Employer has a reasonable belief that Employee may breach this agreement. Employee consents to this disclosure.
16. Tolling During Breach
If Employee breaches any restrictive covenant in this agreement, the Restricted Period for that covenant is extended by one day for each day of the breach, so that the full duration of the restriction runs from the date the breach ends. No extension under this section is open-ended or indefinite.
Drafting Note Tolling duration
A clause extending the restricted period for the time the employee is in breach stands only where the base period and the extension together remain reasonable on their 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 . A day-for-day extension carries less of that risk than an open-ended or indefinite one: no Arizona appellate decision has decided whether a covenant period tolls during breach or enforcement litigation, and any extension counts toward the covenant's total duration, which is measured for reasonableness .
17. Remedies
Employee acknowledges that a breach of this agreement may cause Employer irreparable harm for which money damages would be inadequate, and Employer may seek injunctive or other equitable relief in addition to any other remedies available at law. Any fee-shifting between the parties under this agreement is mutual and prevailing-party based.
Drafting Note Two-way statutory fee exposure
A mutual, prevailing-party fee-shifting clause tracks the exposure Arizona already creates: in any contested action arising out of a contract, the court may award the successful party reasonable attorney fees, whether or not the agreement says anything about fees . The award is discretionary and runs both ways — an employer that loses an overreaching enforcement action can be ordered to pay the former employee's fees — so a one-sided employer clause invites scrutiny without displacing the court's discretion.
18. Enforceability and Severability
If any provision of this agreement is found to be unenforceable, it must be severed to the extent permitted by law, and the remaining provisions remain in full force and effect.
19. Survival and Expiration of Each Covenant
Each restrictive covenant in this agreement survives the termination of Employee's employment for the Restricted Period specified in Cover Terms for that covenant. Obligations under the Confidential Information and Trade Secret Protection section survive as long as the relevant information remains a Trade Secret. All other provisions survive to the extent necessary to enforce rights that arose during employment.
20. Assignment and Successors
Employee may not assign this agreement or any rights or obligations under it. Employer may assign this agreement to any affiliate, successor, or acquirer of all or substantially all of Employer's business or assets. This agreement is binding on and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns.
21. Governing Law, Venue, and Dispute Process
This agreement is governed by the law listed in Cover Terms. All disputes will be resolved in the courts of the Governing Law state, subject to non-waivable rights under applicable law.
Drafting Note Forum clause binds only its signatories
A forum-selection clause binds only its parties. The Arizona Supreme Court has declined to let a non-signatory enforce one against a signatory merely because it is closely related to a party , so an affiliate, founder, or related entity cannot invoke the clause without signing; a non-signatory reaches the forum only as a party or through an express provision that addresses it.
Drafting Note Choice of law
A sister-state choice-of-law clause does not reliably 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 . A Governing Law set to Arizona, with governing-law and venue choices matched to where the employee actually lives and works, aligns the agreement with that result: a clause selecting another state's more lenient regime is likely unenforceable under Restatement (Second) of Conflict of Laws § 187(2)(b) because Arizona does not approve of broad non-compete provisions .
22. Entire Agreement, Amendment, Waiver, and Electronic Signatures
This agreement constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior agreements, understandings, and negotiations on this subject. This agreement may be amended only in writing signed by both parties. A party's failure to enforce any provision does not waive that party's right to enforce it later. This agreement may be executed in counterparts, including by electronic signature, each of which is an original.
Signatures
By signing this agreement, each party acknowledges and agrees to the restrictive covenant obligations above. Employee confirms having read and understood each provision, including the Cover Terms.
Employer
Employer: [Legal name of the entity that employs the employee]
Signature:
Signatory Name: [Full name of the authorized signatory signing for the employer]
Title: [Title of the authorized signatory signing for the employer]
Date:
Employee
Signature:
Print Name: [Full legal name of the employee]
Date: