Local Attorney Deems Non-Compete Act Bad For Business

Rogers attorney Bryce Crawford is concerned Act 921, known as the non-compete act, recently passed by the Arkansas General Assembly, will be bad for business in Northwest Arkansas.

The bill, sponsored by Sen. Jeremy Hutchinson, R-Benton, eases restrictions on the geographical scope of non-competes. “The lack of a specific or defined geographic descriptive restriction … does not make the covenant not to compete agreement overly broad,” the bill reads.

But for Crawford, of The Williams Law Group PLC, the biggest problem is the bill’s language regarding the applicability of a non-compete for current employees.

“An employee’s continued employment is sufficient consideration for a covenant not to compete agreement,” the bill reads.

Crawford says that opens the door for employers to slap non-competes on their employees during their term of employment, rather than making them sign one when they first take the job, as is the custom.

“It’s a hamper on the portability of jobs,” Crawford said. “Employers can now legally go to employees and say, ‘Sign this, or you’re fired.’”

For Crawford, it all adds up to a bad law, especially for an area like Northwest Arkansas, which relies on a constant influx of high-powered, high-dollar talent.

Think about it. An up-and-coming supply chain analyst comes to Northwest Arkansas, does her duty with a vendor, and a few years later sets her sights on Los Angeles. Only one problem. She’s saddled with an Arkansas non-compete that can follow her anywhere. Is that enough to keep her, and many others, from coming here in the first place?

That’s a good question, and one Crawford wants the legislature to address at its next session in 2017.

And for the record, Crawford knows a thing or two about non-competes. He recently represented a scientist sued by Springdale-based nanotechnology manufacturing company NanoMech Inc., which tried to keep a former employee from working at BASF, the largest chemical producer in the world.

Crawford and his client, however, beat Nanomech last year in the U.S. Eighth Circuit Court of Appeals in St. Louis. Why? According to the court, the non-compete would have prohibited the employee from working in her field “in any capacity, anywhere in the world.”

In other words, the non-compete was too broad and was thrown out. Under the new law, however, that wouldn’t be the case. The court would have the authority to rewrite, or “reform” the non-compete between the parties.

For Crawford, that represents an intrusion by the court into the delicate agreements between employers and employees. And that’s not good.

“It’s prudent to have a law on the books, but this goes too far,” Crawford said. “I would like the legislature to roll this back some.”