Arkansas: Expanded Noncompete Prohibitions
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APPLIES TO Employers with Employees in AR |
EFFECTIVE As Indicated |
QUESTIONS? Contact HR On-Call |
Quick Look
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Discussion:
Arkansas Governor Sarah Huckabee Sanders signed into law SB 139, which amends the state’s noncompete statute to provide that noncompete covenants that “restrict the right of a physician to practice within the physician’s scope of practice” are void. The amended law is set to take effect 90 days after adjournment of the current legislative session, likely resulting in a mid-July 2025 effective date.
Under the state’s existing law, a noncompete agreement may be enforceable if it meets certain criteria. Notably, however, the existing statute explicitly states that it does not apply to “a person holding a professional license under Arkansas Code Title 17, Subtitle 3,” which includes physicians and several other health care professionals. Because of this, noncompete agreements for these employees have previously been analyzed under Arkansas common law.
Under the amended law, the state clarifies that a covenant not to compete is unenforceable for certain licensed medical professionals. Specifically, the amended law states, “[a] covenant not to compete agreement that restricts the right of a physician to practice within the physician’s scope of practice is void.” A “physician” is defined as a person authorized or licensed to practice medicine or osteopathy, as those are defined under Arkansas law.
Action Items
- Review noncompete agreements with legal counsel.
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