Are Employee Confidentiality Agreements Enforceable in Arizona?
In Arizona, courts will enforce a confidentiality agreement if it is “reasonable.” Often, confidentiality agreements are written to encompass all of the employer’s information. A court may take issue with such an agreement because confidentiality agreements are supposed to prohibit disclosure of information that is truly confidential. Depending on the employer, truly confidential could include customer lists, financial information, strategic plans, and intellectual property. If the information is or becomes public, or even is shared with another third party, it may no longer be truly confidential.
When going to work for a competitor, it can be problematic. Employees are aware of confidential information and may have just as general knowledge information that the competitor would like to have. This puts the employee in a very difficult spot. They are not allowed to share information with their new employer, even though their new employer may want them to share it. Employees need to tell their new employer that they will not share such information prior to accepting employment.
Employees often have many skills that may benefit their competitor when they leave. Arizona law states that an employee is not required to have a “prefrontal lobotomy” when leaving their employment. This means they can generally use those skills in their new job. However, there are no bright line rules. It is also challenging to demonstrate that confidentiality obligations have not been violated. Generally, the former employer has no way of knowing what exactly the employee may be doing for their competitor.
Employers should have an experienced employment attorney draft their confidentiality policies. Employees should be careful when entering into such agreements because they may interfere with their ability to work elsewhere.
About Author: Jeff Silence is a partner at Jaburg Wilk. He has helped to defend many employees who have been accused of violating their confidentiality agreements. He has also drafted confidentiality agreements for employers. He knows what to look out for and what it takes to avoid costly lawsuits.