Arizona court reaffirms enforceability of nonsolicitation agreements

Barring a successful legal challenge to the Federal Trade Commission’s (FTC) ban on noncompetes, almost all noncompetes will be unenforceable beginning September 4, 2024. As such, employers are concerned about the enforceability of their current agreements that contain post-employment restrictions. Many are asking whether nonsolicitation agreements can still be enforced once the ban takes effect. If so, what does an enforceable nonsolicitation provision look like under Arizona law?

Setting the scene

Brown & Brown Insurance of Arizona (B&B) hired Zachary Hope and Mark New to serve as sales manager and insurance broker, respectively, in the company’s employee benefits division. Hope was responsible for managing insurance brokers, and both were responsible for bringing in new and prospective clients and retaining existing clients through account renewals. Both also signed agreements with B&B that contained a provision prohibiting them from soliciting B&B’s clients for a period of two years following their separation.