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Arkansas Non-Compete Agreement

Arkansas enforces employee non-compete agreements that protect a legitimate business interest and are reasonable in time and scope. Attorney review available.

Introduction

Arkansas rewrote its non-compete law in Act 921 of 2015, now Arkansas Code Section 4-75-101, which lets a business hold a former employee to a promise not to compete for a set time and area so long as it guards a protectable business interest. Arkansas enforces employee non-competes, but only within limits set by statute. Under Arkansas Code Section 4-75-101, enacted by Act 921 of 2015, a covenant that is ancillary to an employment relationship is enforceable to the extent the employer has a protectable business interest and the restriction is limited in time and scope in a manner not greater than necessary to defend that interest. The statute lists what counts as a protectable business interest, including trade secrets, customer lists, goodwill, business methods, and confidential data the employer gave the employee. A post-termination restriction of two years is presumptively reasonable as to length of time, and the absence of a defined geographic area does not by itself make the covenant overly broad if the time and scope are reasonable. If a court finds the restrictions unreasonable, it does not throw the whole clause out: the statute directs the court to reform, or blue-pencil, the covenant to make it reasonable and then enforce it as rewritten. Continued employment is sufficient consideration, so a new benefit is not required. Arkansas has no salary or income threshold. Separate rules apply to physicians and other Title 17, Subtitle 3 license holders, to the sale of a business, and to non-solicit and confidentiality agreements. This page explains Arkansas's rule and offers a template scoped to those limits. It is a state-law overview, not a promise that any given clause will hold up.

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Key Things to Know

  1. 1

    Arkansas Code Section 4-75-101, enacted by Act 921 of 2015, makes a non-compete, an employee's promise not to compete with the business after leaving, enforceable to the extent it protects a business interest and stays no broader than necessary in time and scope.

  2. 2

    Arkansas enforces a non-compete under Arkansas Code Section 4-75-101 if it is ancillary to an employment relationship, the employer has a protectable business interest, and the restriction is limited in time and scope in a manner not greater than necessary to defend that interest.

  3. 3

    Arkansas has no salary or income threshold for a non-compete. Enforceability turns on the protectable business interest and reasonable time and scope, not on how much the employee earns, so do not import another state's wage floor.

  4. 4

    A post-termination restriction of two years is presumptively reasonable as to length of time (Section 4-75-101(d)), and the lack of a defined geographic area does not by itself make the covenant overly broad if the time and scope are reasonable (Section 4-75-101(c)).

  5. 5

    Continued employment is sufficient consideration for a non-compete in Arkansas (Section 4-75-101(g)); an employer does not have to give a new bonus or benefit, and the statute sets no advance-notice-before-signing requirement.

  6. 6

    If a covenant is unreasonable, an Arkansas court must reform, or blue-pencil, it to the extent necessary to make it reasonable and then enforce it as reformed (Section 4-75-101(f)), rather than voiding the whole clause.

  7. 7

    Section 4-75-101 does not apply to Title 17, Subtitle 3 professional-license holders such as physicians, to the sale of a business or franchise, or to non-solicit and confidentiality agreements; employers may also protect data through the Arkansas Trade Secrets Act (Section 4-75-601 et seq.).

Key decisions before you file

Before you file a Non-Compete Agreement in Arkansas, a few decisions shape the document: which option to choose and what each one means. The Non-Compete Agreement guide walks through them.

Open the Non-Compete Agreement guide

Customize your Non-Compete Agreement Template with DocDraft

ARKANSAS COVENANT NOT TO COMPETE (Employee non-compete under Arkansas Code Section 4-75-101)

ARKANSAS NOTICE: This covenant is enforceable only to the extent the Employer has a protectable business interest and the restriction is limited in time and scope in a manner not greater than necessary to defend that interest (Section 4-75-101(a)). A two-year post-termination restriction is presumptively reasonable as to length of time (Section 4-75-101(d)). Keep the terms no broader than needed. This section does not apply to Title 17, Subtitle 3 professional-license holders such as physicians; seek counsel for those.

  1. PARTIES. This Covenant Not to Compete is made on [DATE] between [EMPLOYER NAME] (Employer) and [EMPLOYEE NAME] (Employee).

  2. CONSIDERATION. This covenant is ancillary to the Employee's employment. Under Section 4-75-101(g), the Employee's continued employment is sufficient consideration for this covenant. [If applicable, describe any additional consideration such as a bonus, raise, promotion, or access to confidential information.]

  3. PROTECTABLE BUSINESS INTEREST. The Employer has a protectable business interest in [DESCRIBE, e.g. trade secrets, customer lists, goodwill with customers, business methods, pricing, training, or confidential data the Employer provides to the Employee], as recognized by Section 4-75-101(b).

  4. RESTRICTION. For [PERIOD, presumptively reasonable up to two (2) years] after the Employee's employment ends, the Employee will not [DESCRIBE the competitive activity, limited to what is necessary to protect the interest above] within [GEOGRAPHIC AREA or, if none, the defined group of customers or market to which this restriction is limited]. The restriction reaches only the activity, customers, and area needed to protect the interest in Section 3 and does not bar the Employee from all future work in the field.

  5. REASONABLENESS. The parties intend this covenant to be limited in time and scope in a manner not greater than necessary to protect the Employer's protectable business interest. The parties acknowledge that under Section 4-75-101(c) a defined geographic area is not required if the time and scope are otherwise reasonable. If a court finds any restriction unreasonable, the parties agree the court shall reform it under Section 4-75-101(f) to the extent necessary to make it reasonable and shall then enforce the covenant under the reformed terms.

  6. NON-SOLICITATION (OPTIONAL). During the restricted period, the Employee will not solicit the Employer's customers or employees identified in Section 3. Non-solicitation and confidentiality terms are governed by common-law standards under Section 4-75-101(i), separate from the non-compete restriction above.

  7. CONFIDENTIALITY AND TRADE SECRETS. The Employee will not use or disclose the Employer's confidential information or trade secrets, during or after employment, consistent with the Arkansas Trade Secrets Act (Section 4-75-601 et seq.). This obligation is independent of, and survives, the restriction above.

  8. GOVERNING LAW. This agreement is governed by Arkansas law, including Arkansas Code Section 4-75-101. This section does not apply to a person holding a professional license under Title 17, Subtitle 3.

[EMPLOYER NAME] [EMPLOYEE NAME]

Signature and date Signature and date

Note: Arkansas enforces employee non-competes within limits (Arkansas Code Section 4-75-101). Keep the duration and scope no broader than necessary; a two-year restriction is presumptively reasonable. Courts must reform an overbroad covenant rather than void it (Section 4-75-101(f)). Confirm the restriction fits your protectable interest before using it. For the generic template and other states, see the full Non-Compete Agreement template hub.

Arkansas Requirements for Non-Compete Agreement

Enforceable Within Statutory Limits

In Arkansas an employee non-compete is enforceable under Arkansas Code Section 4-75-101 if it is ancillary to an employment relationship, the employer has a protectable business interest, and the restriction is limited in time and scope in a manner not greater than necessary to defend that interest. A covenant that reaches further than needed is not automatically valid.

No Income Threshold

Arkansas has no salary or income threshold that makes a non-compete valid or invalid. Enforceability turns on the protectable business interest and reasonable time and scope under Section 4-75-101, not on the employee's compensation. Do not rely on any other state salary figure for an Arkansas worker.

Protectable Business Interest Required

The employer must have a protectable business interest for the covenant to stand. Section 4-75-101(b) lists what counts, including trade secrets, intellectual property, customer lists, goodwill with customers, knowledge of business practices, methods, profit margins, costs, confidential business information, employee training, and other valuable data the employer provided to the employee.

Two-Year Duration Presumption

A post-termination restriction of two years is presumptively reasonable as to length of time under Section 4-75-101(d), unless the facts of a particular case clearly show two years is unreasonable compared to the employer's protectable business interest. A longer term is not automatically void but is harder to defend and may be reformed down.

Geographic Limit Not Always Required

Under Section 4-75-101(c), the lack of a specific geographic restriction does not by itself make a covenant overly broad if the time and scope are limited in a manner not greater than necessary. Reasonableness is judged on the nature of the protectable interest, the geographic scope of the business and whether a geographic limit is feasible, whether the restriction is limited to a specific customer group, and the nature of the business.

Continued Employment Is Consideration

Arkansas Code Section 4-75-101(g) provides that an employee's continued employment is sufficient consideration for a covenant not to compete, so an employer does not have to give a separate bonus or benefit to support the clause. The statute sets no advance-notice-before-signing requirement in the employment context.

Courts Reform, Not Void

If a covenant's restrictions are unreasonable and impose a greater restraint than necessary, Section 4-75-101(f) directs the court to reform, or blue-pencil, the agreement to the extent necessary to make the limitations reasonable and then enforce it under the reformed terms. This reversed the older Arkansas rule under which an overbroad covenant was often struck entirely.

Carve-Outs and Trade-Secret Alternative

Section 4-75-101 does not apply to Title 17, Subtitle 3 professional-license holders such as physicians (Section 4-75-101(j)(2)), to the sale of a business or franchise (Section 4-75-101(h)), or to non-solicit, confidentiality, and nondisclosure agreements (Section 4-75-101(i)), which are governed by common law. Employers may also protect confidential data through the Arkansas Trade Secrets Act (Section 4-75-601 et seq.).

Frequently Asked Questions

Yes, within limits. Arkansas Code Section 4-75-101 makes an employee non-compete enforceable if it is ancillary to an employment relationship, the employer has a protectable business interest such as trade secrets, customer lists, or goodwill, and the restriction is limited in time and scope in a manner not greater than necessary to defend that interest. A covenant that reaches further than needed is not automatically valid; a court measures it against the employer's actual protectable interest.

There is no fixed maximum, but Arkansas Code Section 4-75-101(d) provides that a post-termination restriction of two years is presumptively reasonable as to length of time, unless the facts of a particular case clearly show two years is unreasonable compared to the employer's protectable business interest. A term longer than two years is not automatically void, but it is harder to defend and a court may reform it down to a reasonable period.

Under Arkansas Code Section 4-75-101, a covenant must be limited in time and scope in a manner not greater than necessary to protect the employer's business interest. Courts weigh the nature of that interest, the geographic scope of the business and whether a geographic limit is feasible, whether the restriction is confined to a specific group of customers, and the nature of the business. The restriction should match what the employer genuinely needs to protect, not simply bar all future work.

No. Arkansas has no wage or income threshold that turns a non-compete on or off, unlike states that only permit them above a set salary. Enforceability in Arkansas depends on whether the employer has a protectable business interest and whether the time and scope are reasonable under Arkansas Code Section 4-75-101, not on the employee's pay. Do not rely on another state's salary figure for an Arkansas worker.

Yes. Arkansas Code Section 4-75-101(f) directs that if a covenant's restrictions are unreasonable and impose a greater restraint than necessary, the court shall reform, or blue-pencil, the agreement to the extent necessary to make the limitations reasonable, then enforce it under the reformed terms. This changed the older Arkansas common-law approach, under which a court would often strike an overbroad covenant entirely rather than narrow it.

Not necessarily. Arkansas Code Section 4-75-101(c) states that the lack of a specific geographic restriction does not by itself make a covenant overly broad, so long as the time and scope are limited in a manner not greater than necessary to protect the employer's business interest. A restriction tied to a defined set of customers or a specific market can be reasonable in Arkansas even without a drawn radius, but a boundless restriction with no real limit still risks being narrowed.

Arkansas Code Section 4-75-101 states that it does not apply to a person holding a professional license under Arkansas Code Title 17, Subtitle 3, which covers physicians and many medical professions. Covenants involving those license holders are governed by prior common-law standards rather than the statute, and any non-compete affecting a licensed professional in Arkansas deserves individual legal review. This is a professional carve-out, not a wage-based one.

No. In 2024 the Federal Trade Commission issued a rule that would have banned most non-competes nationwide, but a federal court set it aside before it took effect, so it is not currently in force and its status has remained unsettled. Either way, Arkansas Code Section 4-75-101 independently governs employee non-competes in Arkansas, so the federal rule's fate does not change Arkansas law today.