Being fired is disorienting. For some, it is sudden and humiliating. For others, it comes after months of unease. Either way, one question often lingers when the dust settles: Can an employer enforce a non-compete after firing?
In Arizona, the answer is complicated. Courts sometimes uphold these agreements, but only when they are tightly drawn, justified by legitimate business interests, and reasonable in scope. Termination can change the equation, and not always in the employer’s favor.
At Shields Petitti & Zoldan, PLC, our Phoenix attorneys have decades of experience navigating non-compete clauses. Whether you are an employee facing a restrictive contract or an Arizona employer considering enforcement, our trial-tested lawyers can help you understand your rights and the risks associated with these clauses.
Can My Company Enforce a Non-Compete After Firing? Employer Considerations
Employers often assume that termination gives them greater leverage, but Arizona law takes a more cautious view. To enforce a non-compete after firing, you must demonstrate that your company narrowly tailored the restriction to protect legitimate business interests such as safeguarding client lists, confidential strategies, or trade secrets under the Arizona Uniform Trade Secrets Act. Courts are skeptical of broad restrictions, especially when the employee lost their job through no fault of their own.
If termination was for cause, such as misconduct or breach of trust, judges may be more receptive to enforcement. But after a layoff or downsizing, you can face an uphill battle. Drafting contracts with clear, reasonable limits on scope, geography, and duration increases the likelihood of successful enforcement.
Fired Employee Non-Compete: Arizona Legal Baselines
Arizona law does not broadly regulate non-competes across every industry, but it does provide narrow statutory guardrails. For example, the law prohibits restrictive covenants in broadcast employment contracts, signaling the legislature’s reluctance to allow restraints that burden mobility without substantial justification.
For a fired employee with a non-compete, Arizona courts rely on case law. They apply the standard that a restrictive covenant must protect a legitimate business interest and cannot impose an undue hardship. In the past, courts have emphasized that agreements aimed at punishment, not protection, would be struck down.
Enforceability After Termination: Arizona Court Considerations
When determining enforceability after termination in Arizona, courts examine several factors, consistent with the Arizona Supreme Court’s guidance in the 1999 case Valley Med. Specialists v. Farber. These are:
- Reasonableness of scope. In Farber, the court struck down a three-year physician restriction because it covered too wide a geographic area and interfered with patient choice.
- Duration. Arizona courts prefer restrictions measured in months. One year is often the ceiling unless industry evidence supports longer terms.
- Cause of termination. Enforcement is more likely if the employer terminated the employee for misconduct or breach of trust. It is less likely if termination was a layoff or no-fault dismissal.
- Public interest. Courts consider the broader community, especially in industries where enforcement could leave gaps in services or innovation.
Taken together, these factors demonstrate that the law favors balance: Employers may protect legitimate business interests, but they cannot strip employees of their ability to earn a living.
Non-Compete After a Layoff: Arizona Courts Shift the Balance
The role of a non-compete after a layoff in Arizona raises distinct fairness concerns. In the 1989 Bryceland v. Northey, the court emphasized that restrictive covenants must not deprive workers of the ability to earn a living. Thus, courts in Arizona will scrutinize non-compete agreements closely after a layoff and will often strike them down unless the employer can demonstrate extraordinary circumstances.
That said, if a high-level employee had access to trade secrets protected under the Arizona Uniform Trade Secrets Act, a court may enforce a narrowly drawn covenant to prevent misuse of that proprietary information.
Wrongful Termination and a Non-Compete: When Fairness Prevails
If the termination itself was unlawful, the employer’s ability to enforce a restrictive covenant can be significantly weakened. Wrongful termination and non-compete disputes often intersect with anti-discrimination and retaliation statutes, and courts are reluctant to condone such conduct by enforcing restrictive agreements. In practice, a wrongful discharge finding can bar enforcement of a non-compete agreement outright, allowing the worker to pursue their career without restraint.
Take the Next Step with Shields Petitti & Zoldan, PLC
Not every non-compete dispute reaches trial, but when it does, trial experience determines outcomes. At Shields Petitti & Zoldan, litigation is our strength. With over five decades of combined experience, tens of millions in verdicts and settlements, and recognition as Super Lawyers, Best Lawyers, and Million Dollar Advocates Forum members, our attorneys command respect inside and outside the courtroom. Contact us today to schedule a confidential consultation with attorneys who understand how courts enforce non-compete agreements and how to use that knowledge in your favor.
Attorney Michael Zoldan provides legal counsel to individuals and small businesses throughout Arizona. Mr. Zoldan’s practice is based on aggressive and detail-oriented representation, focusing on employment discrimination, wage and hour disputes, harassment, and wrongful termination. Prior to forming Shields Petitti & Zoldan, Mr. Zoldan worked for numerous law firms where he had an opportunity to hone his litigation skills by working on multiple litigation cases at a time with some of the most skilled litigators in the state.
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