HB494 Alabama 2021 Session

Updated Feb 22, 2026

Summary

Primary Sponsor: Chris EnglandRepresentative
Democrat
Session: Regular Session 2021
Title: Contracts, creation and enforcement of non-disparagement agreements, provided
Summary: The Alabama Non-Disparagement Obligations Act creates enforceable non-disparagement clauses in specific contracts and sets rules for how they work and are enforced.
What This Bill Does
It establishes which contracts are covered (employment separation/termination, post-employment settlements, business relationship terminations, and settlements in legal disputes) and requires these contracts to be in writing with consideration. It allows enforcement through civil action if the contract prohibits disparagement and a disparaging statement is made, with either proven damages or automatic liquidated damages. It also provides allowed exceptions for good-faith or legally protected disclosures and sets out confidentiality and procedural rules for court filings.

Who It Affects
Employers, employees, and other parties who sign covered contracts containing non-disparagement provisions, as their speech and potential damages are governed by the act.
Courts, plaintiffs, and defendants in disputes involving covered contracts, who must apply the act’s rules, defenses, and remedies when handling cases.

Key Provisions
Covered contracts include written employment separation/termination agreements, post-employment settlement agreements, written business relationship termination agreements, and settlements between parties to a legal dispute.
Contracts must be in writing, signed, and supported by adequate consideration to be valid and enforceable; they must state that the obligated party may not be liable for breach if they make a disparaging statement in good faith for defined purposes.
Disparaging statements are broadly defined to include statements that harm reputation, reveal private information, or are knowingly false or misleading.
Enforcement requires a written non-disparagement obligation, a disparaging statement by the obligated party, and either demonstrable damages or automatic triggering of a liquidated damages clause.
Good-faith exceptions allow certain communications (e.g., to law enforcement, regulators, in response to subpoenas, legal counsel, or in protected discovery) without liability for breach.
Pleadings and related filings in cases enforcing these contracts may be sealed under court supervision; parties may seek protective orders and notice controls for protected information.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Contracts