SB367 Alabama 2015 Session

Summary

Primary Sponsor

Phillip W. Williams

Republican

Session

Regular Session 2015

Title

Contracts, use of restrictive covenants clarified, Sec. 8-1-1 repealed

Summary

SB367 clarifies Alabama's rules on restrictive covenants in contracts and repeals the old Section 8-1-1.

What This Bill Does

It restates which restraints are allowed to protect legitimate business interests and under what time and geographic limits. It defines what counts as a protectable interest (like trade secrets, confidential info, customer relationships, goodwill, and certain training) and says ordinary job skills are not protectable. It requires restraints to be put in writing with consideration, allows courts to narrow or strike restraints to preserve only valid interests, and sets out remedies and burdens of proof. It also repeals conflicting laws and sets an effective date of January 1, 2016.

Who It Affects

• Employers and businesses: can enforce covenants only if they fit the specified categories, have reasonable time/place limits, are in writing with consideration, and may have restraints reformed by courts.
• Employees, agents, partners, and sellers of goodwill: may be subject to non-compete, non-solicit, or geographic restraints that must be reasonable; have protections if restraints are overly broad; and have the burden of proof and remedies defined.

Key Provisions

• Repeals Section 8-1-1 and restates Alabama law on restrictive covenants.
• Allows certain restraints to preserve a protectable interest (e.g., limits on hiring essential personnel, exclusive dealing, goodwill sales restraints, employee restraints, non-solicitation, and post-dissolution covenants).
• Defines protectable interests (trade secrets, confidential information, customer relationships, goodwill, and specialized training) and excludes ordinary job skills from protection.
• Requires restraints to be in writing, signed, and supported by adequate consideration.
• Courts may reform overly broad restraints or void restraints that do not fit allowed categories.
• Burdens of proof: the enforcing party must prove all elements; the resisting party may raise undue hardship as a defense.
• Remedies for breach include injunctive relief, actual damages or contractually provided liquidated damages, and attorneys' fees or costs when allowed.
• Professional exemptions remain; act reflects public policy and may supersede foreign law; effective January 1, 2016.

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