Non-Compete Agreement for Alabama

NON-COMPETE AGREEMENT



This NON-COMPETE AGREEMENT (hereinafter referred to as the "Agreement") is entered into on _____________ by and between _____________, a(n) _____________ (hereinafter, "Promisee," i.e. the Party receiving the promises herein), and _____________, a(n) _____________ (hereinafter, "Promisor," i.e. the Party making the promises herein) (Promisee and Promisor collectively the "Parties" and each a "Party").

  1. Definitions. For purposes of this Agreement, the following terms are defined as follows:
    1. "Current Customers" means any firm, partnership, corporation, and/or any other entity and/or person that purchased or purchases from the Promisee any of its products or services.
    2. "Prospective Customers" means any firm, partnership, corporation, and/or any other entity and/or person reasonably expected by the Promisee to purchase from the Promisee any of its products or services.
    3. "Vendor" means any individual or entity that provides goods or services to the Promisee.
  2. Consideration. In the consideration for Promisor's business relationship with Promisee and/or other benefits conferred, the continuing business relationship between the Parties, the mutual covenants herein, and other good and valuable consideration, the receipt, and sufficiency of which is hereby acknowledged, Promisor agrees as follows:
    1. Non-Competition. During Promisor's employment, contract, or other business relationship with Promisee, and for a period of _____________ following the termination of Promisor's employment, contract, or other business relationship for any reason or without reason, Promisor shall not in any capacity, whether as an employee, officer, director, partner, manager, consultant, agent, or owner (other than a minority shareholder or other equity interest of not more than 1% of a company whose equity interests are publicly traded on a nationally recognized stock exchange or over-the-counter), directly or indirectly advise, manage, render, or perform services to or for any person or entity, including on Promisor's own behalf, which is engaged in a business competitive to that of Promisee within any city, parish, municipality, or similar division wherein Promisee produces, sells, or markets its goods or services.
    2. No Undue Burden. Promisor acknowledges that: (i) this Agreement has been specifically bargained between the Parties and reviewed by Promisor, (ii) Promisor has had an opportunity to obtain legal counsel to review this Agreement, and (iii) the covenants made by and duties imposed upon Promisor hereby are fair, reasonable, and minimally necessary to protect the legitimate business interests of Promisee, and such covenants and duties will not place an undue burden upon Promisor's livelihood in the event of termination of Promisor's employment, contract, or other business relationship by Promisee and the strict enforcement of the covenants contained herein.
    3. Relationship of the Parties. Promisor acknowledges and agrees that nothing in this Agreement is a guarantee or assurance of a continued business relationship for any specific period of time.
  3. Governing Law. The Parties agree and acknowledge that all provisions of this Agreement shall be governed by and construed in accordance with the laws of the State of _____________.
  4. Survivability. This Agreement will survive the termination, for any reason, of Promisor's employment, contract, or other business relationship with Promisee.
  5. Entire Agreement. This Agreement represents the entire agreement between Promisee and Promisor and may not be modified, changed, or altered by any promise or statement by Promisee other than in writing signed by Promisor and an authorized representative of Promisee.
  6. Waiver. The waiver by Promisee of a breach of any provision of this Agreement by Promisor shall not be considered as a waiver of rights with respect to any subsequent breach by Promisor.
  7. Successors and Assigns. This Agreement binds and benefits the heirs, successors, and assignees of the Parties.
  8. Equitable Relief and Remedies. Promisor acknowledges that any breach of this Agreement will cause substantial and irreparable harm to Promisee for which monetary damages would be an inadequate remedy. Accordingly, Promisee shall in any such event be entitled to seek injunctive and other forms of equitable relief to prevent such breach and the prevailing Party shall be entitled to recover from the other: the prevailing Party's costs (including, without limitation, reasonable attorney's fees) incurred in connection with enforcing this Agreement, in addition to any other rights or remedies available at law, in equity, or by statute.
  9. Third-Party Claims. Should either Party materially breach any part of this Agreement, that breaching Party shall indemnify, hold harmless, and defend the non-breaching Party, including its employees, agents, and other representatives against all third-party claims, liabilities, and expenses, including reasonable attorney's fees and costs, that result from such material breach.
  10. Construction. The terms used in this Agreement shall be construed in both the feminine and masculine, and both single and plural, wherever applicable.
  11. Severability. The Parties have attempted to limit the non-compete provision so that it applies only to the extent necessary to protect legitimate business and property interests. If any provision of this Agreement shall be held to be invalid or unenforceable for any reason, that provision shall be considered removed from this Agreement; however, the remaining provisions shall continue to be valid and enforceable according to the intentions of the Parties. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.
  12. Notice. Any notice required or permitted under this Agreement shall be in writing and delivered in accordance with the provisions of this paragraph. Such notice, if delivered by electronic mail, shall be delivered to Promisee at _____________ or to Promisor at _____________. Such notice, if delivered by personal delivery or U.S. mail, shall be delivered to the Parties at the addresses specified below:

    PROMISEE ADDRESS
    _____________
    _____________, _____________ _____________

    PROMISOR ADDRESS
    _____________
    _____________, _____________ _____________
  13. Counterparts; Electronic Signature. This Agreement may be executed in counterparts, including by fax, email, or other facsimile, each an original but all considered part of one Agreement. Electronic signatures placed upon counterparts of this Agreement by a Party or their approved agent shall be considered valid representations of that Party's signature.

Promisor acknowledges that it has carefully read and understood the provisions of this Agreement and understands that it has the right to seek independent advice at its expense or to propose modifications prior to signing the Agreement and has negotiated proposed modifications to the extent it deems necessary. Nothing contained in this Agreement creates a contractual right to a continued employment, contract, or business relationship for a definite term. Promisor represents and warrants that it has entered into this Agreement voluntarily and after consulting with whomsoever it so wished.


PROMISOR

Signed: ___________________________ Date: _________________, 20_____

Name: ___________________________

Title: ___________________________


PROMISEE

Signed: ___________________________ Date: _________________, 20_____

Name: ___________________________

Title: ___________________________

Instructions for Your Non-Compete Agreement



A non-compete agreement is used to restrict competition between a business (the Promisee) and an employee, contractor, or other business (the Promisor) with which it deals.

Note that if the agreement occurs in a state that doesn't allow non-compete agreements, or if you choose to exclude the non-compete clause, then your agreement will then be titled as a "Non-Solicitation Agreement."

Non-Competition

The non-compete clause will prohibit the Promisor from engaging in similar work as performed for the Promisee. If the Promisor works in an occupation or industry that requires having many clients at once (e.g. financial advisers or attorneys) or holds a relatively narrow expertise, courts may not enforce such a provision if it is an overly burdensome restriction on the Promisor's ability to find work.

No matter what the Promisor's occupation is, however, it is important that the non-compete clause is tailored to be as narrowly restrictive as possible. If the Promisee operates in an industry that is rapidly changing, such as in the IT industry, then it will be hard to justify a non-compete term lasting longer than six months or a year. In most cases, if you include a non-compete term longer than two years, then you will be running a higher risk of a court someday shortening it down or invalidating it altogether.

Non-Solicitation

The non-solicitation provisions prevent the Promisor from adversely interfering with any of the Promisee's business relationships; for instance, by trying to lure away the Promisee's own employees, customers, or vendors. The timeframe of the non-solicitation should be limited as much as possible so as to not be overly burdensome on the Promisor while still protecting the Promisee's interests. Courts generally accept anything between three months and two years depending upon what is reasonable under the circumstances.

It is usually a good idea to include these provisions unless you want to outline them in a separate agreement. However, these provisions will likely need to be negotiated between the parties upfront.

Dispute Resolution

It is recommended that you include an arbitration provision when prompted. This will require disputes to be settled through binding arbitration and avoid the time and expense of going through the formal court system.

Next, you will indicate which state's laws will govern the agreement. Usually, the Promisee lists its principal place of business as the governing state or the state where the two parties are conducting business together.

Additional Terms

You can add additional terms and conditions as desired. This allows you complete flexibility to tailor the document to reflect the specific situation and true intent of the parties, but be sure to preview the agreement first so that you know what has already been included.

Executing Your Agreement

After you finish completing the form, executing your agreement is a simple matter of having both parties sign and date it. Make sure that both parties also receive a copy of the agreement.

Enforceability of Non-Compete Clauses by State

Your state law may limit the use of non-compete clauses. Review the list below to see whether non-competes are typically enforceable in your state.

  • Alabama – Allowed except for certain professionals, which are not subject to non-compete clauses ("professionals" is limited to the higher professions, such as doctors, veterinarians, accountants, etc.). Also, non-compete clauses can only be agreed to after employment has begun.
  • Alaska – Allowed.
  • Arizona – Allowed except for broadcasters and physicians, who are not subject to non-compete clauses.
  • Arkansas – Allowed.
  • CaliforniaNon-compete clauses are not enforceable under California law. However, LegalNature's non-compete agreement may still be used to prohibit the employee from soliciting customers and other employees away from the employer. Please note that non-solicitation of customers clauses are enforceable only where the customer identities are entitled to protection as trade secrets. California employers can still execute a non-disclosure agreement using LegalNature to prevent the disclosure or use of confidential information and trade secrets by employees.
  • Colorado – Allowed, but only as to executives and management personnel. As to lower level employees, LegalNature's non-compete agreement may still be used to prohibit an employee from soliciting other employees (but not customers) away from the employer. Non-compete agreements may be enforceable when they involve a contract for the purchase and sale of a business, a contract for the purchase and sale of business assets, or covenants by executives and management personnel and employees who constitute professional staff to executives and management personnel.
  • Connecticut – Allowed except for broadcasters and security guards, who are not subject to non-compete clauses.
  • Delaware – Allowed except for physicians, who are not subject to non-compete clauses.
  • District of Columbia – Allowed except for broadcasters, who are not subject to non-compete clauses.
  • Florida – Allowed except for mediators, who are not subject to non-compete clauses.
  • Georgia – Allowed.
  • Hawaii – Allowed.
  • Idaho – Allowed.
  • Illinois – Allowed except for broadcasters, government contractors, and physicians, who are not subject to non-compete clauses.
  • Indiana – Allowed.
  • Iowa – Allowed except for business franchisees that do not renew, who are not subject to non-compete clauses.
  • Kansas – Allowed except for some accountants, who are not subject to non-compete clauses.
  • Louisiana – Allowed except for auto salesmen and some real estate broker licensees, who are not subject to non-compete clauses. Non-compete and non-solicitation provisions are only valid if limited to specific parishes, municipalities, cities, or parts thereof, and the covenant does not exceed two years from termination of employment.
  • Maine – Allowed except for broadcast industry professionals, who are not subject to non-compete clauses.
  • Maryland – Allowed except for broadcasters, physicians, nurses, social workers, and psychologists, who are not subject to non-compete clauses.
  • Massachusetts – Allowed.
  • Michigan – Allowed.
  • Minnesota – Allowed.
  • Mississippi – Allowed.
  • Missouri – Allowed except for some secretaries and clerks, who are generally not subject to non-compete clauses.
  • MontanaNon-compete clauses are not enforceable except with the sale of a business or the dissolution of a partnership. Montana courts also do not generally uphold non-solicitation clauses. Still, Montana employers can still execute a non-disclosure agreement to prevent the disclosure or use of confidential information and trade secrets by employees.
  • Nebraska – Allowed.
  • Nevada – Allowed.
  • New Hampshire – Allowed.
  • New Jersey – Allowed except for in-house counsels and psychologists, who are not subject to non-compete clauses.
  • New Mexico – Allowed.
  • New York – Allowed.
  • North Carolina – Allowed.
  • North DakotaNon-compete and non-solicitation clauses are not likely to be enforceable in North Dakota. The narrow exception is if these occur in connection with the sale of a business or the dissolution of a partnership. Therefore, you likely cannot use either of these two clauses unless this narrow exception would apply. Still, North Dakota employers can still execute a non-disclosure agreement to prevent the disclosure or use of confidential information and trade secrets by employees.
  • Ohio – Allowed.
  • OklahomaNon-compete clauses are not allowed. Note that Oklahoma law permits the use of non-solicitation agreements with employees or independent contractors, but does not permit prohibitions on the hiring or employment of such individuals by former employees or independent contractors. Still, Oklahoma employers can still execute a non-disclosure agreement to prevent the disclosure or use of confidential information and trade secrets by employees.
  • OregonNon-compete clauses are only permitted in certain statutorily enumerated circumstances, and are void unless in strict compliance with statutory requirements. Oregon law currently requires many employers to provide two weeks advance written notice or a bona fide advancement of the employee by the employer as a prerequisite to enforceability (see ORS 653.295(1)(a)). Non-compete clauses are only enforceable as to those engaged in administrative, executive, or professional work who earn a salary and are paid on a salary basis (see ORS 653.020). A non-compete cannot be enforced against an employee whose total gross income is less than the median income of a family of four in Oregon as determined by the latest statistics from the US Census Bureau ($67,315 for 2013 in Oregon) (see ORS 653.295(1)(d)). However, Oregon employers may now enter into an enforceable non-solicitation agreement at any time during the employment relationship with the employee. Still, Oregon employers can still execute a non-disclosure agreement to prevent the disclosure or use of confidential information and trade secrets by employees.
  • Pennsylvania – Allowed.
  • Rhode Island – Allowed.
  • South Carolina – Allowed.
  • South Dakota – Allowed.
  • Tennessee – Allowed except for some physicians, who may not be subject to non-compete clauses.
  • Texas – Allowed except for some physicians, who may not be subject to non-compete clauses.
  • Utah – Allowed.
  • Vermont – Allowed except for beauticians and cosmetologists (by their schools), who are not subject to non-compete clauses.
  • Virginia – Allowed.
  • Washington – Allowed except for broadcasters (in some circumstances), who are generally not subject to non-compete clauses.
  • West Virginia – Allowed.
  • Wisconsin – Allowed.
  • Wyoming – Allowed.
Please note that the language you see here changes depending on your answers to the document questionnaire.

Non-Compete Agreement

Non-compete agreements allow you to restrict competition between a business and the employees, contractors, or other businesses with which it deals. These agreements are an effective way for businesses to ensure that key insiders do not use their privileged knowledge against the business.

LegalNature provides step-by-step guidance to help you create a fully customizable non-compete agreement. Easily restrict the other party from engaging in competitive activities in any location in which your business operates or sells its products. You will also have the option to include an arbitration agreement as well as your own custom terms.

LegalNature's intuitive form will guide you through creating your non-compete agreement in minutes. Get started now to protect your business against unwarranted competition.

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