Alabama Non-Compete Agreement Template

An Alabama Non-Compete Agreement is a legal document that prohibits employees from taking sensitive information with them when they leave an employer.

Alabama allows non-compete agreements only in a narrow scope. A non-compete agreement can protect against things like using customer lists, pricing information, confidential product data, and much more.

Reasonable Uses and Objections

• 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.

• Legally Enforceable in Alabama?
• What's Protected?
• Reasonable Use and Exceptions
• Limitations on Time
• Geographic Limitations
• Sample

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 (§ 8-27-2)
• 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 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 supported by adequate consideration.
• Must preserve a protectable interest (§ 8-1-190).
• Employee-employer relationship must exist at the time the agreement is executed.
• A two-year restriction is presumptively reasonable.
• The employee must prove undue hardship if raised as a defense.

Exceptions to non-compete agreements in Alabama include:

• Professionals like doctors, lawyers, and more.

Limitations on Time

The state law states that non-competes should be reasonable regarding duration and geographic scope. While a specific time limit is not defined, court cases in the state have repeatedly shown 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, two years or fewer agreements have a higher chance of being enforceable.

Geographic Limitations

Alabama does not have defined geographical limitations on non-compete agreements. However, the state generally errs on disapproving agreements unless they are reasonable.

So it is usually better to only set geographic limitations as necessary. Excessive geographic limitations covering a large land area will likely not be enforceable in the state.

Sample

Download an Alabama Non-Compete Agreement template in PDF or Word format here:

Start building your Alabama Non-Compete Agreement here.