Updated on December 3rd, 2022
An Alaska non-compete agreement is a legal document that establishes restrictions to prevent an entity or individual from competing directly or indirectly with a business. These contracts are often implemented during a business sale or when employers want to prohibit employees from starting or joining an entity in the same industry as them. The agreement must protect legitimate business interests and can only restrict competition that would result in an unfair disadvantage to the enforcer of the agreement.
The provisions contained within the form will define the length of the agreement, describe the types of activities or behaviors that are prohibited, create a reasonable geographical scope, and ensure an equitable and legal arrangement.
Non-compete agreements are enforceable in the state of Alaska but they are not governed by state statutes. Courts of law have found some employer-employee non-competes valid and reasonable but, overall, they believe them to be a restraint on trade. When an NCA is applied to the sale of a business, courts are more tolerant and will generally enforce them.
- Reasonable provisions. Because state law does not govern non-competes specifically, and there are few standards created by common law, Alaska courts will consider a non-compete agreement enforceable if it is reasonable overall, equitable for both parties, and does not restrain trade. The following questions are asked when reviewing the agreement to determine reasonableness:
- Are there durational and geographical limitations?
- Was the employee the only person in contact with the employer’s customers?
- Was the employee given access to trade secrets or other confidential information?
- Does the agreement aim to prevent regular competition or only unfair competition?
- Does the agreement aim to restrict the employee from using their inherent skills and experience?
- Does the agreement appropriately balance the benefit to the employer with the impediment to the employee?
- Is the type of work restricted by the agreement the employee’s only means of earning a living?
- Did the employee develop the skills and experience the employer aims to restrict during their employment?
- Is the restricted work merely incidental to the employee’s new position?
- Attorneys. Non-compete agreements that aim to restrict a lawyer’s ability to practice law are held to be void and unenforceable.
A maximum time limit has not been set for employer-employee non-compete agreements by state law or common law. Courts will decide whether or not an agreement is reasonable based on the facts of the case.
There are no established laws governing the maximum geographical restriction of a non-compete. Alaska courts have ruled in favor of NCAs without any geographical limitations when other restrictions were established to make them enforceable, such as focusing solely on prohibiting the employee from misappropriating the employer’s information or stealing customers.
In one case involving a business sale, the non-compete covenant restricted the recipient from practicing dentistry within a 15-mile radius of the buyer’s principal office for the first two (2) years, and then a 15-mile radius for the following three (3) years.
- DeCristofaro v. Security National Bank, 664 P.2d 167, 168-69 (Alaska 1983)
- Dominic Wenzell, D.M.D. P.C. v. Ingrim, 228 P.3d 103 (Alaska 2010)
- Data Management, Inc. v. Greene, 757 P.2d 62 (Alaska 1988)
- Alaska R. Prof’l. Cond. 5.6
- National Bank of Alaska v. J.B.L. K. of Alaska, 546 P.2d 579, 582-86 (Alaska 1976)
- Metcalfe Investments, Inc. v. Garrison, 919 P.2d 1356, 1361-62 (Alaska 1996)
- Wirum Cash Architects v. Cash, 837 P.2d 692, 710-11 (Alaska 1992)
Alaska Non-Disclosure Agreement – A legal form that prevents a person from sharing sensitive data.
Alaska Non-Solicitation Agreement – A binding contract used to prevent a departing employee from poaching contacts, customers, or other employees from their former employer.