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Alabama Non-Compete Agreement

Alabama enforces employee non-compete agreements within statutory limits: a protectable interest, reasonable duration and geography, and no wage threshold.

Introduction

Alabama runs its non-compete rule in two steps: Code of Alabama Section 8-1-190 first voids any contract that restrains a lawful trade, then allows a departing worker's promise not to compete for a set time and area when it protects a recognized business interest. In Alabama an employee non-compete is enforceable, but only within limits. Code of Alabama Section 8-1-190(a) starts from the premise that any contract restraining a lawful profession, trade, or business is void, then Section 8-1-190(b) allows several kinds of restraint that preserve a protectable interest. To hold up, an Alabama non-compete must protect a protectable interest defined in Section 8-1-191 (such as trade secrets, confidential information, customer relationships, goodwill, or specialized training), be limited to a specified geographic area, and be reasonable in duration. The statute sets rebuttable presumptions of reasonable length: two years or less for an employee non-compete, one year or less for a sale of business goodwill, and 18 months (or as long as post-separation consideration is paid) for a customer non-solicitation. Alabama sets no wage or income threshold. The covenant must be in writing, signed, and supported by adequate consideration (Section 8-1-192), and courts may reform an overbroad clause rather than void it (Section 8-1-193). Professionals such as physicians and attorneys remain exempt (Section 8-1-196). This page explains Alabama's rule and offers a template scoped to what the statute allows. It is a state-law overview, not a promise that any given clause will hold up.

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Key Things to Know

  1. 1

    Under Code of Alabama Section 8-1-190, a non-compete agreement, the contract by which an employee promises not to compete with the business for a time after leaving, is enforceable only when it guards a protectable interest such as trade secrets or customer relationships.

  2. 2

    Alabama enforces non-competes under Code of Alabama Section 8-1-190. Subsection (a) voids a restraint on a lawful profession, trade, or business except as the section provides, and subsection (b) allows an employee non-compete, a non-solicitation, a sale-of-goodwill covenant, and covenants on dissolution, each to preserve a protectable interest.

  3. 3

    Alabama has no salary or income threshold that a worker must earn before a non-compete applies. Enforceability turns on a protectable interest, reasonable duration and geography, writing, and consideration, not on how much the employee is paid. Do not rely on any other state's wage figure.

  4. 4

    Duration must be reasonable, and Section 8-1-190 sets rebuttable presumptions: two years or less for an employee non-compete, one year or less for a sale of goodwill, and 18 months (or the length of post-separation consideration, whichever is greater) for a customer non-solicitation. The restraint must also be limited to a specified geographic area.

  5. 5

    The covenant must be in writing, signed by all parties, and supported by adequate consideration to be valid (Code of Alabama Section 8-1-192). Where the protectable interest is specialized and unique training, that training must be set out in writing as the consideration for the restraint (Section 8-1-191).

  6. 6

    Professionals remain exempt: Section 8-1-196 preserves every professional exemption Alabama law recognizes, so members of a learned profession such as physicians and attorneys generally cannot be bound by a non-compete. If a clause is overly broad, an Alabama court may reform it to what is reasonable rather than void it (Section 8-1-193).

  7. 7

    Because a non-compete only reaches a protectable interest, Alabama employers also protect confidential data with a confidentiality or non-disclosure agreement and the Alabama Trade Secrets Act (Code of Alabama Section 8-27-1 et seq.), which is available even for professionals who cannot be subject to a non-compete.

Key decisions before you file

Before you file a Non-Compete Agreement in Alabama, a few decisions shape the document: which option to choose and what each one means. The Non-Compete Agreement guide walks through them.

Open the Non-Compete Agreement guide

Customize your Non-Compete Agreement Template with DocDraft

ALABAMA COVENANT NOT TO COMPETE (Employee non-compete under Code of Alabama Section 8-1-190)

ALABAMA NOTICE: An employee non-compete is enforceable in Alabama only if it preserves a protectable interest (Section 8-1-191), is limited to a specified geographic area, is reasonable in duration, and is in writing and supported by adequate consideration (Section 8-1-192). A restraint of two years or less is presumed reasonable, but that presumption can be rebutted, so tie the duration and area to the interest you are actually protecting. Professionals such as physicians and attorneys are exempt (Section 8-1-196); do not use this form for a professional. Keep the duration and area narrow, because a court may reform an overbroad clause rather than enforce it as written (Section 8-1-193), and the employer bears the burden of proof on every element (Section 8-1-194).

  1. PARTIES. This Covenant Not to Compete is made on [DATE] between [EMPLOYER NAME] (Employer) and [EMPLOYEE NAME] (Employee).

  2. PROTECTABLE INTEREST. The Employer has a protectable interest under Code of Alabama Section 8-1-191 in the following: [ ] trade secrets and confidential information; [ ] commercial relationships with specific customers or clients; [ ] business goodwill; [ ] specialized and unique training provided to the Employee, described here as the consideration for this covenant: [DESCRIBE]. The Employee has or will have access to this interest.

  3. CONSIDERATION. In exchange for this covenant the Employer provides [NEW EMPLOYMENT / RAISE / SPECIALIZED TRAINING / OTHER ADEQUATE CONSIDERATION]. The parties agree this is adequate consideration under Section 8-1-192.

  4. NON-COMPETE. For [DURATION, two years or less is presumed reasonable] after the Employee's separation, the Employee will not carry on or engage in a similar business within [SPECIFIED GEOGRAPHIC AREA where the Employer operates].

  5. NON-SOLICITATION. For [18 MONTHS or the period post-separation consideration is paid, whichever is greater] the Employee will not solicit the Employer's current customers with whom the Employee had contact.

  6. TRADE SECRETS. The Employee will not use or disclose the Employer's trade secrets or confidential information, consistent with the Alabama Trade Secrets Act (Code of Alabama Section 8-27-1 et seq.). This duty is independent of the covenants above and has no time limit for trade secrets.

  7. REFORMATION AND GOVERNING LAW. This agreement is governed by Alabama law. If any restraint is overly broad, the parties ask the court to reform it to the extent reasonable to protect the interest above, as Section 8-1-193 allows, rather than void it.

[EMPLOYER NAME] [EMPLOYEE NAME]

Signature and date Signature and date

Note: Alabama enforces employee non-competes within limits (Code of Alabama Section 8-1-190). The restraint must preserve a protectable interest (Section 8-1-191), be reasonable in duration (two years or less is presumed reasonable) and geography, and be in writing with adequate consideration (Section 8-1-192). Professionals are exempt (Section 8-1-196), and courts may reform an overbroad clause (Section 8-1-193). Confirm your clause is narrowly tailored before using it. For the generic template and other states, see the full Non-Compete Agreement template hub.

Alabama Requirements for Non-Compete Agreement

Enforceable Within Limits

In Alabama an employee non-compete is enforceable within statutory limits. Code of Alabama Section 8-1-190(a) voids a restraint on a lawful profession, trade, or business except as the section provides, and Section 8-1-190(b) permits an employee non-compete that preserves a protectable interest, is limited to a specified geographic area, and is reasonable in duration.

No Income Threshold

Alabama has no salary or income threshold for a non-compete. Unlike states that only permit non-competes above a wage floor, Alabama lets a non-compete apply regardless of pay, so long as it protects a protectable interest and is reasonable. Do not rely on another state's salary figure when the worker is in Alabama.

Reasonable Duration Presumptions

Duration must be reasonable. Code of Alabama Section 8-1-190 sets rebuttable presumptions: two years or less is presumed reasonable for an employee non-compete, one year or less for a sale of business goodwill, and 18 months (or the length of post-separation consideration, whichever is greater) for a customer non-solicitation. The restraint must also be limited to a specified geographic area.

Protectable Interest Required

An Alabama non-compete must protect a protectable interest defined in Code of Alabama Section 8-1-191: trade secrets, confidential information, commercial relationships with specific customers or clients, customer or client goodwill, or specialized and unique training. Job skills by themselves are not a protectable interest, so the covenant must tie to one of these recognized interests.

Writing and Adequate Consideration

To be valid, the covenant must be reduced to writing, signed by all parties, and supported by adequate consideration (Code of Alabama Section 8-1-192). Where the protectable interest is specialized and unique training, that training must be set out in writing as the consideration for the restraint. The party seeking enforcement bears the burden of proof on every element (Section 8-1-194).

Professionals Are Exempt

Professionals remain exempt in Alabama. Code of Alabama Section 8-1-196 preserves every professional exemption Alabama law recognizes, and long-standing case law holds members of a learned profession such as physicians, attorneys, and accountants generally cannot be bound by a non-compete. Use a confidentiality and trade-secret agreement to protect information from a professional instead.

Courts May Reform an Overbroad Clause

Code of Alabama Section 8-1-193 lets a court void an overly broad or unreasonable-duration restraint in part and reform it to preserve the protectable interest, often called blue-penciling. If the restraint does not fit a Section 8-1-190(b) category, the court may void it entirely. Because reformation is discretionary, draft the geography and duration narrowly rather than rely on a court to fix them.

Federal FTC Rule Is Not in Force

The 2024 Federal Trade Commission non-compete rule was set aside by a federal court before it took effect, so it is not currently binding, and its status remains unsettled. Alabama does not depend on it: Code of Alabama Section 8-1-190 and following independently governs whether a non-compete is enforceable in Alabama regardless of what happens with the federal rule.

Frequently Asked Questions

Yes, within limits. Code of Alabama Section 8-1-190(a) voids a restraint on a lawful profession, trade, or business except as the section allows, and Section 8-1-190(b) permits an employee non-compete that preserves a protectable interest, is limited to a specified geographic area, and is reasonable in duration. So a narrowly drawn Alabama non-compete tied to trade secrets, confidential information, customer relationships, goodwill, or specialized training can be enforced, while an overbroad one may be reformed or struck down.

There is no fixed maximum, but the duration must be reasonable, and Code of Alabama Section 8-1-190 sets rebuttable presumptions. A restraint of two years or less is presumed reasonable for an employee non-compete, one year or less for a sale of business goodwill, and 18 months (or as long as post-separation consideration is paid, whichever is greater) for a customer non-solicitation. A court can still find a longer or shorter period unreasonable on the facts of the case.

No. Unlike states that only allow non-competes above a set income floor, Alabama has no wage or salary threshold. A non-compete can apply to a worker regardless of pay, so long as it protects a protectable interest, is limited in duration and geography, and is supported by adequate consideration. Do not import another state's dollar figure when the worker is in Alabama.

Code of Alabama Section 8-1-191 defines a protectable interest to include trade secrets, confidential information (such as pricing, customer lists and data, financial information, and business plans), commercial relationships with specific customers or clients, customer or client goodwill, and specialized and unique training that involved substantial expense. Job skills by themselves are not a protectable interest, so a non-compete must tie to one of these recognized interests to be enforceable in Alabama.

Yes. Code of Alabama Section 8-1-193 lets a court void an overly broad or unreasonable-duration restraint in part and reform it to preserve the protectable interest, which is often called blue-penciling. If the restraint does not fit one of the categories in Section 8-1-190(b), the court may void it entirely. Because reformation is discretionary, Alabama employers should still draft the geography and duration narrowly rather than rely on a court to fix an overbroad clause.

Generally yes. Code of Alabama Section 8-1-196 preserves every professional exemption recognized by Alabama law, and long-standing Alabama case law holds that members of a learned profession, such as physicians, attorneys, and accountants, generally cannot be bound by a non-compete. An employer that wants to protect confidential information from a professional in Alabama should use a confidentiality agreement and trade-secret protection instead of a non-compete.

Under Code of Alabama Section 8-1-192, the covenant must be reduced to writing, signed by all parties, and supported by adequate consideration. It must also protect a recognized protectable interest, be limited to a specified geographic area, and be reasonable in duration. The party seeking to enforce the covenant carries the burden of proof on every element (Section 8-1-194), so an Alabama non-compete should be specific and tied to a genuine business interest.

No. In 2024 the Federal Trade Commission issued a rule that would have banned most non-competes nationwide, but a federal court set it aside before it took effect, so it is not currently in force and its status has remained unsettled. Either way, Alabama's own statute, Code of Alabama Section 8-1-190 and following, governs whether a non-compete is enforceable in Alabama, so the federal rule's fate does not change Alabama law today.