AR HB1628

Covenant not to compete agreements are prohibited in Arkansas, with limited exceptions for business sales, franchise agreements, and other non-employment contractual relationships.

Employees who sign non-compete agreements may engage in the same or similar business as their former employer after termination, provided they do not directly solicit the established customers of that former employer.

The bill does not apply to nonsolicitation agreements, confidentiality agreements, nondisclosure agreements, covenants protecting trade secrets or inventions, or agreements related to business sales and franchise agreements.

Existing common law standards remain in effect for non-compete agreements outside employment relationships and for other types of employer-employee agreements that do not concern competition.

The bill does not impair protections under the Arkansas Trade Secrets Act or apply to persons holding professional licenses under Arkansas Code Title 17, Subtitle 3.