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Employee Restrictive Covenant Agreement

Cover Terms

The terms below are incorporated into and form part of this agreement.

Employer[Legal name of the entity that employs the employee]
Employee[Full legal name of the employee]
Employee Title / Position
Effective Date[Effective date of this agreement — the date the last party signs. It anchors the duration presumptions stated in Cover Terms.]
Governing LawAlabama
Confidentiality
Trade Secrets DurationPerpetual
Other Confidential Information Duration24 months
Employee No-Hire
Duration24 months
Market benchmark (based on 76 companies)HideShow
TermFrequency
12 months44.7%
Selected default24 months34.9%
18 months11.2%
Why this selected default?

Why is this the selected default?

24 months matches the modal employee non-solicit term observed in benchmarked, publicly-filed employee agreements; 12 months is the common lighter alternative. The Act sets no express duration presumption for the no-hire category, so the uniquely-essential scope limit does the primary category work; counsel should size the term to the workforce interest actually protected.

Customer Non-Solicitation
Duration12 months
State-law basis 12 months

Reference only — not part of this agreement.

12 months sits well inside the presumptively reasonable window for a current-customer non-solicit: eighteen months, or for as long as post-separation consideration is paid, whichever is greater. Counsel may extend toward eighteen months, or longer while post-separation consideration is paid, where the interest supports it.

Specialized Training Recital
No Business with Covered Customers
Duration12 months
State-law basis 12 months

Reference only — not part of this agreement.

12 months sits within the current-customer window. Because non-dealing has no category of its own, it is drawn to fit inside the current-customer non-solicit exception, and its duration tracks that category's presumption.

Non-Investment
Duration12 months
Non-Disparagement
Duration24 months

Standard Terms

1. Defined Terms

“Competitive Business” means the business activities described in Cover Terms under Competitive Business.

“Confidential Information” means non-public information relating to Employer's business, including trade secrets, customer lists, pricing, business processes, technical data, and strategic plans, but excluding information that becomes public through no fault of Employee and excluding Employee's general skills, knowledge, and experience.

“Covered Customers” means current customers, vendors, referral sources, and business partners of Employer with whom Employee had material contact or for whom Employee had responsibility during the 12 months before termination of employment, and does not include former customers or merely prospective customers.

“Covered Employees” means employees of Employer who hold a position uniquely essential to the management, organization, or service of Employer's business within the meaning of Ala. Code § 8-1-190(b)(1), and with whom Employee worked or whom Employee managed during the 12 months before termination of employment.

“Passive Public Holdings” means ownership of securities of a publicly traded company representing less than five percent of any class of such company's securities, and interests in diversified mutual funds, index funds, and exchange-traded funds that may hold securities of a Competitive Business.

“Protected Interests” means Employer's Protected Interests within the meaning of Ala. Code § 8-1-191(a), namely its trade secrets (as defined in the Alabama Trade Secrets Act, Ala. Code § 8-27-2), its confidential information, its commercial relationships or contacts with specific prospective or existing customers, patients, vendors, or clients, its goodwill, and any specialized and unique training set forth in writing under this agreement as the consideration for a restraint; Employee's job skills, in and of themselves and without more, are not a Protected Interest.

“Restricted Period” means the duration specified in Cover Terms for each covenant, beginning on the date Employee's employment with Employer ends for any reason.

“Restricted Territory” means the geographic area described in Cover Terms under Restricted Territory.

“Solicit” means to directly or indirectly contact, approach, induce, encourage, or provide Confidential Information to any person or entity for the purpose of diverting business away from Employer, but does not include responding to general advertisements or unsolicited inquiries not initiated by Employee.

“Trade Secrets” has the meaning given in the Alabama Trade Secrets Act, Ala. Code § 8-27-2, which Ala. Code § 8-1-191(a)(1) incorporates as a Protected Interest.

2. Recitals and Protectable Interests

Employer and Employee acknowledge that each restrictive covenant in this agreement protects one or more of Employer's Protected Interests. Where a covenant relies on specialized and unique training as a Protected Interest, that training and its anticipated expense are set forth in the Specialized Training Recital in Cover Terms as consideration for the restraint. Employer would not provide Employee with access to its Protected Interests absent the protections in this agreement.

Drafting Note The six statutory categories a covenant must fit

Alabama voids every restraint by default and enforces only a covenant that fits one of the six exceptions in Ala. Code § 8-1-190(b), so a covenant that fits no listed category, or that reaches only the employee's general job skills rather than a listed interest, is void no matter how carefully it is drafted . The employee non-compete, the current-customer non-solicit, and the uniquely-essential no-hire each have a named category, but a non-dealing or non-investment restraint has none of its own: it holds only where it is confined to fit inside a listed exception, and a version that reaches past that boundary is exposed to the § 8-1-190(a) void rule rather than to mere narrowing .

Drafting Note Specialized training consideration

Specialized training supports an Alabama covenant only on a specific drafting condition. Section 8-1-191 makes specialized training a protectable interest only when the training and its anticipated expense are specifically set forth in writing in the agreement as consideration for the restraint, so a covenant resting on a generic or boilerplate training recital protects no listed interest and fails on that element .

3. Timing, Consideration, and Right to Consult Counsel

This agreement is in writing, signed by all parties, and supported by the consideration stated in it. The parties acknowledge that Employee entered into this agreement on or after the first day of the employer-employee relationship with Employer. Employer has given Employee the opportunity to consult with an attorney before entering into this agreement. Employee acknowledges that the restrictions in this agreement are reasonable and necessary to protect Employer's Protected Interests. This agreement is effective as of the Effective Date listed in Cover Terms.

Drafting Note Signature timing

An Alabama covenant stands only where the company itself signs the exact document that contains the non-compete while the employment relationship is in place. After Amanda Howard Real Estate v. Lee, an employer's failure to timely sign the covenant document leaves that covenant void, and a much-later signature, payment, or assent shown by conduct does not cure it; a fresh covenant going forward is enforceable only where it independently satisfies § 8-1-192 .

4. Confidential Information and Trade Secret Protection

Employee must treat all Confidential Information as strictly confidential. Employee must not use or disclose Confidential Information except as required to perform authorized job duties or with Employer's prior written consent. Employee's obligations regarding trade secrets continue in perpetuity for as long as the information remains a trade secret. Employee's obligations regarding other Confidential Information continue for the period specified in Cover Terms.

5. Permitted Disclosures and Protected Conduct

Nothing in this agreement prohibits Employee from: (a) reporting possible violations of law to any government agency, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other federal, state, or local agency; (b) making disclosures protected under whistleblower provisions of any law; (c) discussing wages, hours, or other terms and conditions of employment as protected by applicable law, including Section 7 of the National Labor Relations Act, 29 U.S.C. § 157; (d) testifying truthfully in legal proceedings; or (e) filing a sealed complaint in court using Confidential Information without liability. Pursuant to the Defend Trade Secrets Act (18 U.S.C. § 1833(b)), Employee may not be held criminally or civilly liable for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed court filing.

6. Return, Deletion, and Certification of Company Property

Upon termination of employment, Employee must promptly return to Employer all documents, devices, files, credentials, and other materials containing or relating to Confidential Information. Where permitted, Employee must permanently delete electronic copies of Confidential Information from personal devices and accounts. Employee must certify compliance with this section in writing upon Employer's request.

7. No-Hire of Uniquely Essential Employees

During the Restricted Period, Employee must not hire, employ, Solicit, recruit, or attempt to hire or employ any Covered Employee. This covenant does not apply to any other employee of Employer. This restriction does not prohibit Employee from providing a professional reference upon request or from hiring a person who responds to a general advertisement not directed specifically at Employer's employees.

Drafting Note The uniquely-essential limit on employee no-hire covenants

A covenant restricting the hire or employment of another party's workers fits Ala. Code § 8-1-190(b)(1) only where the worker holds a position uniquely essential to the management, organization, or service of the business — a high bar few rank-and-file or mid-level employees meet . A workforce-wide no-hire or no-poach clause fits no § 8-1-190(b) category, so it is exposed to being voided in its entirety rather than narrowed, and a covenant confined to the uniquely-essential class at the outset is the one that survives.

8. Non-Solicitation of Current Customers

During the Restricted Period, Employee must not Solicit the business of any Covered Customer. This covenant applies only to Employer's current customers, patients, vendors, referral sources, and business partners, not former or merely prospective ones.

9. No Business with Covered Customers

During the Restricted Period, Employee must not accept, service, or do business with any Covered Customer, regardless of whether Employee or the Covered Customer first initiated contact. This covenant applies only to current Covered Customers.

10. Non-Investment

During the Restricted Period, Employee must not acquire or hold any active ownership interest in, serve as a director, officer, manager, or advisor to, or have material economic participation in any Competitive Business. Passive Public Holdings are permitted. The Restricted Period must not exceed two years after termination.

11. Non-Disparagement

During the Restricted Period specified in Cover Terms for Non-Disparagement, Employee must not make statements that are intended to or reasonably likely to disparage Employer, its officers, directors, employees, products, or services. This section does not restrict Employee from making truthful statements in legal proceedings, providing truthful testimony, making disclosures to government agencies, or exercising rights protected by law, including Section 7 of the National Labor Relations Act, 29 U.S.C. § 157.

12. Professional Practice Carve-Out

Notwithstanding any other provision of this agreement, no restrictive covenant in this agreement restrains, or is enforceable to restrain, a member of a recognized Alabama profession from practicing that profession. Restraints on Employee's business conduct outside that practice, and the confidentiality, trade-secret, property-return, and non-disparagement obligations in this agreement, remain in effect to the extent they do not bar the practice itself.

Drafting Note Covenants that bar a professional from practicing

A member of a recognized Alabama profession cannot be barred from practicing that profession, even by a covenant that would otherwise fit a § 8-1-190(b) category: § 8-1-196 preserves the common-law professional exemption, and a professional cannot fall within the statutory exceptions at all, so a covenant restraining professional practice is void on that ground . The exemption reaches only the practice of the profession, so a restraint on business conduct outside that practice — Benchmark's example of acquiring competing practices purely as an investment without managing them — can still operate, and the confidentiality, trade-secret, and property-return obligations survive to the extent they do not bar the practice itself .

13. No Conflicting Obligations

Employee represents that performing duties for Employer and complying with this agreement does not conflict with any prior agreement, court order, or legal obligation binding on Employee. Employee must promptly disclose to Employer any potential conflict that arises during employment.

14. Notice to Future Employers and Other Third Parties

Employer may disclose the existence and terms of this agreement to any prospective employer or business associate of Employee if Employer has a reasonable belief that Employee may breach this agreement. Employee consents to this disclosure.

15. Tolling During Breach

If Employee breaches any restrictive covenant in this agreement, Employer may seek to have the Restricted Period for that covenant extended by one day for each day of the breach, so that the full duration of the restriction runs from the date the breach ends.

16. Remedies

Employee acknowledges that a breach of this agreement may cause Employer irreparable harm for which money damages would be inadequate. Employer may seek injunctive relief, damages, and any other remedy available in contract law, including attorneys' fees or costs where provided for in this agreement or otherwise provided by law. Nothing in this agreement limits any defense available to Employee in law or equity. Any fee-shifting under this agreement is mutual and prevailing-party based.

17. Enforceability and Severability

If any provision of this agreement is found to be unenforceable, the remaining provisions remain in full force and effect. Each restrictive covenant in this agreement is intended to be independently enforceable.

18. Survival and Expiration of Each Covenant

Each restrictive covenant in this agreement survives the termination of Employee's employment for the Restricted Period specified in Cover Terms. Obligations under the Confidential Information and Trade Secret Protection section survive for the Trade Secrets Duration specified in Cover Terms to the extent they relate to trade secrets, and for the Other Confidential Information Duration specified in Cover Terms for other Confidential Information. All other provisions survive to the extent necessary to enforce rights that arose during employment.

19. Assignment and Successors

Employee may not assign this agreement or any rights or obligations under it. Employer may assign this agreement to any affiliate, successor, or acquirer of all or substantially all of Employer's business or assets. This agreement is binding on and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns.

20. Governing Law, Venue, and Dispute Process

This agreement is governed by Alabama law for an Alabama-based Employee. Disputes will be resolved in Alabama courts, subject to non-waivable rights under applicable law.

21. Entire Agreement, Amendment, Waiver, and Electronic Signatures

This agreement constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior agreements, understandings, and negotiations on this subject. This agreement may be amended only in writing signed by both parties, and any amendment or restatement that carries a restrictive covenant forward is itself signed by all parties, including Employer, consistent with Ala. Code § 8-1-192. A party's failure to enforce any provision does not waive that party's right to enforce it later. This agreement may be executed in counterparts, including by electronic signature, each of which is an original.

Signatures

By signing this agreement, each party acknowledges and agrees to the restrictive covenant obligations above. Employee confirms having read and understood each provision, including the Cover Terms. Consistent with Ala. Code § 8-1-192, all parties, including Employer, sign the document containing the restrictive covenants below.

Employer

Employer: [Legal name of the entity that employs the employee]

Signature:

Signatory Name: [Full name of the authorized signatory signing for the employer]

Title: [Title of the authorized signatory signing for the employer]

Date:

Employee

Signature:

Print Name: [Full legal name of the employee]

Date:

Adapted from OpenAgreements Wyoming and Florida restrictive covenant templates. Licensed under CC BY 4.0.