Are non-compete agreements enforceable in Alabama?

1. Baseline Rule. Ala. Code § 8-1-190 to § 8-1-197 (effective Jan. 1, 2016, replacing § 8-1-1) governs. Section 8-1-190(a) declares every contract by which anyone is restrained from exercising a lawful profession void, EXCEPT in specified categories.

2. Permitted Categories. Non-competes are enforceable only against (a) agents, servants, or employees in the business of a commercial entity (with limitations); (b) one who sells the goodwill of a business; (c) partners upon dissolution; or (d) members of an LLC. Professionals such as lawyers, accountants, and physicians have limitations.

3. Reasonableness Factors. The covenant must (a) protect a legitimate protectable interest of the employer, (b) be reasonable in time, geographic area, and scope of activity, and (c) not impose undue hardship on the employee.

4. Duration Caps. Section 8-1-193 establishes presumptive maximums: 2 years for employees; 18 months for sale-of-business asset protection; 3 years for sale-of-business goodwill protection; the dissolution-of-business period for partners.

5. Consideration. Continued at-will employment is sufficient consideration in Alabama if the covenant is signed at hire. Mid-employment covenants require new consideration.

6. Wage Thresholds. None.

7. Blue Pencil / Reformation. Section 8-1-194 permits courts to modify and enforce overbroad covenants to the extent reasonable.

8. Industry Carve-Outs. Section 8-1-190(b)(2) excludes "professionals" — long interpreted to include doctors, lawyers, engineers, and other professionals — making non-competes against them generally void. Lawyers also barred by Ala. RPC 5.6.

9. FTC Rule. Enjoined nationwide by Ryan LLC v. FTC (E.D. Tex. Aug. 2024); on appeal.

10. Choice of Law. Alabama courts apply Alabama law where another state's law conflicts with Alabama public policy on professionals or duration caps.

This is legal information, not legal advice.