When an employee signs a covenant not to compete with his employer he may promise not to compete with his employer for a specified time period, in a particular area, or in a specific way after he is terminated or leaves that job. Non-compete agreements are very common in the sales industry. When there is a possibility that an employee may leave work with his current employer to begin working with a competitor, the employer may require the employee sign one of these agreements to prevent any competitive advantage.
In Alabama, non-compete agreements are considered valid and enforceable if the employer can prove that he has a legitimate business interest to protect in restraining an employee’s right to compete against him. Thus, the enforceability of such agreements is determined on a case-by-case basis. In determining whether a non-compete agreement is enforceable, Alabama courts consider a number of factors including whether the agreement is reasonable as to its time and region restrictions and whether these restrictions impose any undue hardship on the employee to find work.
For example, non-compete agreements must be limited in geography to be enforceable. Alabama courts have interpreted this to mean that non-competes can only restrict competition in the same region where the former employer does business. They must also be limited by time. In Alabama, this means the restrictions on competition cannot be indefinite. Generally, non-competes can only limit competition for up to two years. However, the undue hardship imposed on the employee will be considered in determining what time and region restrictions are reasonable.
If you are asked to sign a non-compete agreement, it is important to consider the terms of the agreement carefully before signing because the agreement may be enforceable and prevent you from seeking other opportunities when you leave your employer. Our Birmingham, Alabama employment law firm has reviewed a number of employment contracts throughout the State of Alabama. If you are having any issues with a non-compete agreement contact us at (205) 588-0699 for a free consultation to discuss your situation.