An Alabama non-compete agreement is a legal document that prohibits employees from taking sensitive information with them when they leave an employer. A non-compete agreement can protect against things like using customer lists, pricing information, confidential product data, and much more.
Non-compete laws vary by state, Alabama allows non-compete agreements but only in a narrow scope. You can’t put anything you want in an agreement. It has to align with Alabama’s laws and statutes.
Below is a guide to what is and is not enforceable in Alabama.
Is a Non-Compete Legally Enforceable in Alabama?
Non-compete agreements in Alabama are legally enforceable, but only in certain situations. The state passed a statute in 2018 that made non-compete agreements void and invalid except in specific situations spelled out within the statute.
What’s Protected?
The following items can be protected with a non-compete agreement in Alabama:
- Trade secrets [1]
- Confidential information
- Commercial relationships or contacts with specific prospective or existing customers, patients, vendors, or clients
- Customer, patient, vendor, or client goodwill
- Specialized and unique training involving substantial business expenditure specifically directed to a particular agent, servant, or employee (if identified in writing as consideration for the restriction).
Reasonable Use and Exceptions
Alabama has several defined reasonable uses and exceptions for non-compete agreements in the state.
The reasonable uses include:
- Must be in writing, signed by all parties, and be supported by adequate consideration.
- Must preserve a protectable interest. [2]
- Employee-employer relationship must exist at the time the agreement is executed.
- A two-year restriction is presumptively reasonable.
- Employee has burden of proving undue hardship if raised as a defense.
Exceptions to non-compete agreements in Alabama include:
- Professionals like doctors, lawyers, and more.
You should also keep in mind the following FAQs when using an Alabama Non-Compete Agreement:
Enforceable when terminated without cause? – Yes
Employee non-solicitation agreement permitted? – Yes
Customer non-solicitation agreements permitted? – Yes
Does continuing employment equal sufficient consideration? – Yes
Non-Compete Alabama Limitations
Limitations on Time
The state law states that non-competes should be reasonable in terms of duration and geographic scope. While a specific time limit is not defined, court cases in the state have shown repeatedly that two years is the limit on what is considered reasonable. However, it’s possible that a state court could judge that a time less than that is more reasonable. Generally, agreements that are two years or less have a higher chance of being enforceable.
Non-compete Agreement Alabama Geographic Limitations
Alabama does not have defined geographical limitations on non-compete agreements. However, the state generally errs on the side of disapproving agreements unless they are reasonable. So it is usually better to only set geographic limitations as necessary. Excessive geographic limitations covering a large area of land will likely not be enforceable in the state.
Alabama Non-Compete Agreement Sample
Download an Alabama Non-Compete Agreement template here:
