Focus on noncompetes increases after the Great Resignation

We’re hearing from business clients what we’re all seeing in the headlines: Employees are hard to hire and retain these days. “The Great Resignation” is a new phrase used to describe the unprecedented level of employee movement in the past year. A natural consequence of this phenomenon is that noncompete agreements are being tested now more than ever, and we’ve seen a corresponding rise in noncompete disputes across Arkansas. This article will highlight some common issues employers are running into and questions we’ve been asked.

Must you pay for noncompetes to be enforceable?

Yes. For noncompetes signed after July 21, 2015 (when a landmark noncompete statute became effective), an employee’s continued employment is sufficient consideration. For noncompetes signed on or before July 21, 2015, the case law requires some consideration, but it doesn’t specify what constitutes enough for it to be enforceable.

Are noncompetes enforceable?

This is often the million-dollar question, and there’s a lot here to unpack. The answer depends on several factors, which include the length and the geographic reach of the restriction. In addition, it relies on how specifically it’s tailored to the needs of the business seeking to enforce it.

What's a reasonable duration for a restriction? It depends. The first question to ask is, “When was this noncompete agreement signed?” As mentioned, the watershed date is July 21, 2015, which is when the noncompete statute came into play.