Ala.: ‘Professionals’ May Be Exempt from Noncompete Clauses

By May 28, 2014

If an employee was properly classified as a “professional” under Alabama state law, his former employer may not be able to enforce a noncompete clause against him, a state appeals court ruled.

In January of 2013, Keith Rogers resigned his position as a securities broker with G.L. Smith & Associates Inc. When he originally was hired, Rogers agreed to a noncompete clause that upon his termination of employment provided that he would refrain from acting as a securities broker within the state of Alabama for a period of two years. Breach of this provision would make Rogers liable for damages and attorney’s fees.

In June, Smith filed suit against Rogers claiming he had violated this provision by attempting to solicit Smith’s clients. Rogers motioned to dismiss the case on the grounds that the noncompete clause was unenforceable under an Alabama statute that in part provides, “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.” Rogers further argued that because he was required by the Smith contract to maintain his security broker license in good standing, he was performing in a professional capacity, and not that of a routine employee. As a professional, Rogers therefore asserted his efforts to pursue gainful employment were protected by law.

The trial court agreed with Rogers and dismissed Smith’s cause of action. Smith appealed to the state supreme court, which then transferred the case to a court of appeals. On appeal, Smith argued that Rogers was not a professional as contemplated by the statute, and that in any event, Rogers failed to show he qualified as a professional.

The appeals court reviewed the factors to be considered in determining whether or not an individual can be properly classified as a professional: “Professional training, skill, and experience required to perform certain services; delicate nature of the services offered; and the ability and need to make instantaneous decisions.” Under previous cases, the court noted that professionals would include vocations such as accountants, veterinarians, and physicians, but not exterminators.

Rogers argued that because he is subject to strict state and federal regulation in his licensing and the performance of his work, he qualified as a professional. However, the court felt the evidence was not sufficient to reach that determination. “Based on the sparse information in the record, we cannot agree that there is no set of facts under which [Smith] might prevail in its efforts to enforce the [noncompete] provision of the employment agreement.” Because the facts on this issue remained in dispute, the court reasoned that dismissal would be premature.

The appeals court reversed the trial court and remanded for further proceedings.

G.L. Smith & Associates Inc. v. Rogers, Ala. Ct. Civ. App., No. 213022 (May 16, 2014).

Kirk Rafdal, J.D., is a staff writer for SHRM.

MEMBER BENEFITS

CA Resources at Your Fingertips

View all Resources Now

Job Finder

Find an HR Job Near You

SPONSOR OFFERS

Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 3,200 companies

Search & Connect