Make a Alabama Non-Compete Agreement

Applicable State Laws - Section 8-1-90

Also known as The New Act, Alabama's new non-compete law is more restrictive. For example, Alabama forbids commercial entities to use any type of agreement that limits a person or business's ability to hire essential personnel or another business’s commercial dealings with another essential partner such as a vendor or seller. In addition, non-compete agreements must be fair to the employee in both their time limits, scope, job skills, and geographic area. They must specifically "preserve a protectable interest," which includes protecting the good will of a business and customer list. It is generally presumed that the acceptable time limit according to Alabama code is around two years.

Protect your Alabama business by also using an Alabama non-disclosure agreement form. Download an Alabama non-disclosure agreement form now!

How to Write an Alabama Non-Compete Agreement 

Unlike other states, Alabama law is very strict regarding how non-compete agreements may be written in order to protect their enforceability. Because such agreements are important, you should first review the non-compete statute. Additionally, you should seek the services of a licensed attorney to ensure that your non-compete agreement complies with the new law, does not violate public policy, and whether Alabama courts are likely to uphold the agreement.  

• Purpose. This clause explains the purpose of the non-compete agreement, which is to protect the confidential information of the business. It also defines the parties and includes an effective date. It refers to confidential information as proprietary information. Proprietary information may include current customers' information among other things.
• Non-compete. This section of the agreement may include the time period, geographical restrictions, business practices, clients or customers, general competitors, business activities, specific competitors, specific activities, and employee solicitation.
• Time period. Some non-compete agreements may have a specific clause that outlines the time period as well as when the time period begins. The time period begins either when the employee or independent contractor begins working for the business or when their relationship is terminated.
• Purchase option. A purchase option clause states whether your company will or will not allow the recipient to be released from the agreement for a specific payment amount. If so, the amount of the payment is listed in this clause.
• Jurisdiction. The jurisdiction clause is used to set the laws that will govern the agreement to Alabama laws.
• Confidential information. This clause states that the term "confidential information" as it is used throughout the agreement means any and all technical and non-technical information provided by your business that includes and is not limited to any data or other proprietary information related to products, inventions, plans, methods, processes, developmental or experimental products, intellectual property, software, databases, customer lists, vendor or supplier lists, marketing methods, reports, business plans, financial information, or other matters pertaining to your business or any of your clients, consultants, or licensees that is disclosed to the recipient under the terms of the non-compete agreement.
• Permitted disclosure. This clause explains when confidential information is no longer confidential. This generally occurs when information becomes public through no fault of the recipient, when the information is discovered by the recipient on their own without a breach of another person, or is released to the public after the written consent of the business, etc.
• Confidentiality. This clause states that the recipient acknowledges that they have access to is confidential and that they agree that they will not directly or indirectly disclose or communicate it directly or indirectly to another party without the written consent of the business. They also agree that they may not use the information for any other purpose except to further the business without the written consent of the business.
• Consultants and employees bound. This clause states that both consultants and employees are bound by the agreement. It also states that consultants and employees are on a need-to-know basis for the information and that they must keep the confidential information in the strictest of confidence.
• Return of materials. This clause states that when the agreement is terminated or when the business requests it, that the recipient will promptly return all documents and other tangible material that represents the confidential information of the business and any copies that exist. The business will also notify the recipient upon discovery of any loss or unauthorized disclosure of the confidential information.
• Remedies. This clause explains the remedies that the business is entitled to pursue in the event that the recipient breaches the agreement. Examples include the recovery of court costs and reasonable attorney fees, the award by a court of a temporary restraining order or preliminary injunction against the unauthorized use, etc., as well as all other remedies available under Alabama law or equity.
• Choice of law. This clause states that a non-compete agreement is governed by the laws of the State of Alabama.
• Entire agreement. This final clause states that the entire agreement may be amended in writing and only if the parties sign it. Both parties must sign and print their names. The signatures must also be dated. Each party should receive a copy of the agreement for their records.