Alabama Non-Compete Agreement

Introduction

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.

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.