HB241 Alabama 2014 Session

Summary

Primary Sponsor

Chris EnglandRepresentative

Democrat

Session

Regular Session 2014

Title

Contracts, use of restrictive covenants clarified, Sec. 8-1-1 repealed

Summary

HB241 would clarify and restate Alabama's rules for restrictive covenants in contracts and repeal the old 8-1-1 law.

What This Bill Does

The bill clarifies what kinds of noncompete and similar restraints are allowed to protect a business's legitimate interests. It defines protectable interests to include trade secrets, confidential information, strong customer relationships, goodwill, and certain specialized training. It requires restraints to be in writing, signed, supported by adequate consideration, and mutual, and lets courts void restraints that are overly broad or unnecessary. It outlines remedies for breach (injunctive relief, actual or liquidated damages, and attorney's fees) and preserves professional exemptions; it also states the act governs over conflicting laws and takes effect January 1, 2015, while repealing the old 8-1-1 law.

Who It Affects

• Employers and their employees/agents: This group must follow the clarified rules for when and how restrictive covenants can be used to protect business interests, with requirements for writing, mutuality, and reasonableness of scope.
• Buyers and sellers of a business and partners winding down a business: This group can use covenants to limit competition in a geographic area tied to the business being sold or dissolved, with reasonable time and place limits and a presumption of reasonableness for restraints of one year or less.

Key Provisions

• Protectable interests include trade secrets, confidential information, substantial relationships with customers or clients, goodwill, and specialized training tied to a particular employee (job skills alone are not protectable).
• Allowed restraints include agreements limiting employee or business-to-business competition, and post-sale or post-dissolution restraints within a geographic area, all with reasonable time and place restrictions; restraints of one year or less are presumed reasonable.
• Valid restraints must be in writing, signed by all parties, supported by adequate consideration, and mutual in significant provisions; courts may void restraints that are overly broad or not necessary to protect a valid interest.
• Remedies for breach include injunctive relief, actual damages or lawful liquidated damages, and attorneys’ fees if provided; the act preserves existing exemptions and will supersede conflicting laws, with an effective date of January 1, 2015.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Contracts