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Where an employer claims a financial remedy or damages for breach of a restrictive covenant in an employment contract, the employer will need to show some loss resulting from the breach. This will normally be loss of profits on contracts or opportunities diverted by the employee.
A covenant not to compete, also called a "nompete agreement" or "non compete clause," is an agreement where one party promises not to compete with the other party in a specified area for a certain period of time. A covenant not to compete can be found in an employment contract or a sale of business contract.
The general position is that post-termination restrictive covenants are void on public policy grounds as being in restraint of trade, unless they are being used by the employer to protect a legitimate business interest.
The non-compete clause is limited to a specific geographic area with no more than a two-year duration regarding its restrictions. The agreement is to not solicit the current customers of the business in question for up to 18 months maximum.
It is possible to find non-compete loopholes in certain circumstances in order to void a non-compete contract. For instance, if you can prove that you never signed the contract, or if you can demonstrate that the contract is against the public interest, you may be able to void the agreement.
Generally speaking, non-compete agreements (also sometimes called non-competition agreements, or simply non-competes) are not enforceable in California against former employees.
Non-competes no good against independent contractors. The Alabama Supreme Court has also construed the wording of the current statute's predecessor (language also contained within the current statute) to preclude enforcement of non-compete agreements against independent contractors (as distinguished from employees).
This is because of its potential to be anti competitive, and therefore against public policy. Restrictive covenants are only enforceable if their effect is stringently restricted to what is essential to protect particular business relationships and information.
Duration: Post-termination restrictive covenants that exceed 6 months are unlikely to be enforceable unless the employee is in a very senior, executive or key business role (see further under Question 6).
In the state of Alabama, the general laws disfavor non-compete agreements. For example, according to the state's 2016 statute update under Alabama Code Section 8-1-1, every contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind...is to that extent void.