Learning about the main non-compete agreement areas of Alabama Law can help you deal with employment disputes.
When it comes to freedom of trading, Alabama law tends to favor those who favor themselves. Like most states, lawmakers in Alabama prefer not to interrupt with the day-to-day trading of commercial companies. On the other hand, without non-compete agreements, businesses in the state would have no way to protect against former employees becoming competitors. Non-compete agreements shore up the short fall in this area.
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What is a Non-Compete Agreement?
Non-compete laws can’t hold up against public policy unless they fall into a specific set of criteria. These criteria, or exceptions, include things like not stealing your former employer’s customers and agreements about buying and selling goods. The only time you may encounter it is when one of the parties has a protectable interest. Let’s look at an example.
Fred works for ABC Technologies as a software developer. Fred is responsible for creating programs that automate the biggest client’s daily business processes. This software saved the client thousands, so ABC Technologies charged them handsomely for the privilege of using it. But now Fred has taken a job with higher pay with Corp Tech, who sell similar services to the same client base. To prevent Fred from passing on his profit-making software program, ABC Technologies has him sign a non compete contract when he starts work for the,
In Fred’s case, the company could ask him to agree not to compete directly, not to work in the same business, or not to steal their clients. They can also impose time limits on the contract. For example, they might make him sign a non-compete agreement to say he won’t work in this area of tech for 6 months.
Non-compete clauses are usually part of the employee’s contract at the point of hire. Employers can’t stop professionals such as doctors or lawyers from practicing under Alabama law, even with a non-compete agreement. Remember that you can’t just hire any type of lawyer to fight this. A divorce lawyer has no special skills in non-compete agreements.
What are the 3 Main Types of Non-Compete Agreement in Alabama Law?
Under Alabama state law specifically uses three main types of non-compete laws. The Code of Alabama is passed by the House of Representatives and the Alabama Senate. Here are the 3 types of non-compete agreement you may come across.
1 – Dissolution Agreements
Dissolution agreements occur when a partnership ends. It might be a business partnership, or it could be a collaboration. Either way, when it dissolves, a dissolution agreement is the type of non-compete agreement used. A dissolution agreement sets out the terms of the ending. It allocates asset sales and prevents either partner from continuing to practice with the same clients.
2 – Non-Solicitation of Customers
A non-solicitation agreement prevents former employees and business associates from using company information to solicit others. Usually this means no thieving your former employer’s customers. It may also relate to enticing clients away using trade secrets or company specific knowledge.
3 – Clauses that Promote Exclusivity
Exclusivity clauses or exclusivity agreements prevent companies selling goods or services to other people. Your firm could receive a contract from a huge client, who wants your exclusive attention. This falls under non-compete agreement legislature in Alabama.
These are the three most frequently filed non-compete agreement types in the state. Getting to know them can prepare you for the types of contract employers may make you sign when you start a new job.
