National Survey on Restrictive Covenants
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National Survey on Restrictive Covenants
National Survey on Restrictive Covenants
This survey has been provided by the Fox Rothschild Labor and
Employment and Securities Industry practice groups as a quick reference
for in-house counsel and human resource professionals. The law in
this area not only varies considerably from state to state and changes
frequently, but its application is fact-specific. This outline therefore is not
a substitute for, and should not be relied upon as, legal advice concerning
any particular restriction or factual situation.
For more information contact:
Ernest E. Badway 212.878.7986 ebadway@foxrothschild.com
Joshua Horn 215.299.2184 jhorn@foxrothschild.com
Ian D. Meklinsky 609.895.6756 imeklinsky@foxrothschild.com
Jeffrey D. Polsky 415.364.5563 jpolsky@foxrothschild.com
About Fox Rothschild
Fox Rothschild LLP is a national law firm with 800 attorneys practicing in
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New Jersey, New York, Pennsylvania, Texas and Washington. Our lawyers
provide a full range of legal services to public and private business entities,
charitable, medical and educational institutions and individuals throughout
the country.
The firm as a whole ranks among the top 200 law firms nationally,
according to The American Lawyer. Our attorneys and staff are supported
by sophisticated technologies that link our offices and promote rapid
communication and collaboration among our departments and practice
groups. Clients have access to the full resources of our attorney network,
and to the depth of experience available firmwide. Every matter receives
the individualized attention, innovative strategies and cost-effective
approaches that are the hallmarks of our firm.
Our practice is an aspect of Fox Rothschild that is not found in many
other law firms. We provide not only high-quality and cost-effective legal
services, but also a perspective on local government, local politics, the
local judiciary and local practices that can be attained only by a law firm
intimately involved with the needs and concerns of the communities where
its lawyers practice.
Fox Rothschild’s goal of becoming the preeminent law firm in the nation
has driven our expansion into strategic locations throughout the country.
In tandem with our overall expansion, our individual offices have added
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These attorneys bring a depth and breadth of experience clients can rely
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have access to one of the largest and deepest legal practices in the nation.
NATIONAL SURVEY ON RESTRICTIVE COVENANTS
STATE NON-COMPETE NON-SOLICITATION NON-HIRE/ “RAIDING” CONFIDENTIAL INFORMATION
Alabama “Every contract by which anyone is restrained
from exercising a lawful profession, trade or
business of any kind otherwise than is provided
by this section is to that extent void.” Ala. Code §
8-1-190
The Restrictive Covenants Act is codified at Ala.
Code § 8-1-190, et seq. (Alabama Laws Act
2015-465, signed by Governor Bentley on June
11, 2015, and referred to as the “Restrictive
Covenants Act”.) – went into effect 1/1/16
Enforceable covenant relates to a protectable
interest of the employer; the restriction is
reasonably related to that interest; the restriction
is reasonable in time and place, and the
restriction imposes no undue hardship on the
employee.1
Protectable interests include trade information,
customer relationships that employee has
access to and confidential information.2
Courts may revise overbroad covenant to create
enforceable covenant.3 Parties may also
“preauthorize” courts to revise covenants to
“save” them.4
Governed by Ala Code § 8-1-190,
et seq.
“Not every contract which imposes
a restraint on trade or competition
is void.’ The fact that a contract
‘may affect a few or several
individuals engaged in a like
business does not render it void
[under §§ 8-1-1, Ala. Code 1975].’
Every contract ‘to some extent
injures other parties; that is, it
necessarily prevents others from
making the sale or sales
consummated by such contract.’
(citations omitted)5
Governed by Ala Code § 8-1-190, et seq.
Agreements in which competitors or
contracting entities agree not to hire each
other’s employees are enforceable subject
to Ala. Code §§ 8-1-1 (2009).6
Also:
“[T]he tort of intentional interference with
contractual relations in the context of
inducing an employee to leave a
competitor requires an enforceable
contract of employment, an absence of
justification for interference in such
contract, and evidence of injury.”7
In the absence of unlawful conduct, hiring
a competitor’s former employees does not
constitute unfair competition.8
State has adopted the Uniform Trade Secrets
Act, Ala. Code §§ 8-27-1, et seq.
Alaska Factors to weigh in evaluating enforceability:
absence of limitations as to time and space;
whether the employee is the sole contact with
the customer; whether the employee has
confidential information or trade secrets; whether
the covenant seeks to eliminate more than
ordinary competition; whether covenant seeks to
stifle skill and experience of employee; whether
the benefit to employer is disproportional to the
harm to employee; whether the covenant acts as
a bar to the employee’s sole means of support;
whether the employee’s talent was developed
A covenant not to contact former
customers will be unreasonable if
the employee did not have access
to confidential information12
No applicable law Trade secrets are defined as “information that
derives independent economic value, actual or
potential, from not being generally known to, and
not being readily ascertainable by proper means
by, other persons who may obtain economic
value from is disclosure or use” and is subject to
reasonable efforts to maintain its secrecy.
Alaska Stat. §§ 45.50.910, et seq.
Status of customer lists and account information
as trade secrets has not been addressed by the
courts.
