Chicago Business Litigation Lawyer Blog
This Article gives an excellent over view of non-compete agreement law in various states. It summarizes the law for these agreements in the following states: Arizona, Colorado, Georgia, Illinois, Missouri and New York. It provides a number of insightful tips on how courts are likely to view non-compete agreements depending on the facts of the case. For instance, it concludes, in our opinion accurately, that Illinois courts will likely be more likely to enforce non-compete agreements if the employee has engaged in some sort of wrongful behavior such as misappropriating confidential information or starting the competing business using the employer’s computers and other resources.
With regard the to Illinois the article states:
Illinois courts generally disfavor employer-employee restrictive covenants. Consequently, courts look for reasons not to enforce restrictive covenants and the fact that an employee is “low level” often creates an equitable reason for the court to refuse to enforce restrictive covenants. However, bad conduct by a former employee, whether by taking confidential information or poaching former customers of the former employer, often will overcome a court’s reluctance to enforce a restrictive covenant against a low-level employee.
Historically, Illinois courts only enforced such restrictive covenants if the employer could demonstrate it had a legitimate protectable interest. Courts defined legitimate protectable interest to include “near permanent customer relationships” or confidential information. In 2011, the Illinois Supreme Court revisited this issue in Reliable Fire Equipment v. Arredondo, holding that an employer must demonstrate both a legitimate protectable interest and the reasonableness of the scope (activity, time and geographic). However, the Reliable Fire court also held that an employer could establish a legitimate protectable interest in ways other than confidential information or long-standing customer relationships, creating further confusion in the Illinois legal landscape. This ruling required trial courts faced with a motion for temporary restraining order seeking to restrain a former employee from competing to focus on what interest an employer is seeking to protect and whether that interest is sufficiently clear at a preliminary stage such that a TRO is justified. Generally, Illinois courts have looked to two key issues in recent years—has the former employee “taken” confidential information and is the former employee using such confidential information to pursue his former employer’s clients. If the answer to either of these questions is yes, Illinois courts are likely to enforce a restrictive covenant.
An interesting dilemma has arisen in the last four years since the Illinois Appellate Court decided Fifield v. Premier Dealers Services. The Fifield court held that at-will employment is inadequate consideration to support restrictive covenants until at least two years of at-will employment have passed since the agreement was put in effect. This creates another hurdle for enforcing restrictive covenants against lower-level employees. Most low-level employees are employees at will. Consequently, for an employer to be confident that its restrictive covenants will not fail for lack of consideration, some unrestricted consideration (e.g., a signing bonus) must be provided at the outset of the employment relationship.
The article neglects to mention that most Illinois federal courts interpreting Fifield do not recognize the two-year rule predicting that the Illinois Supreme Court would not uphold it. The article also doesn’t mention that other consideration can result in enforcement of the non-compete even in the absence of two years of employment. The two year rule is not an absolute rule in any event and if an employee works just short of two years even Illinois state courts will not likely enforce it strictly. In a recent case we litigated, the Appellate Court in an unpublished decision held that such an argument advanced by the other side was frivolous.
Click here to view the full article.
Our Chicago non-compete agreement attorneys have defended high level executives in covenant not to compete and trade secret lawsuits. A case in which our firm defended a former Motorola executive was covered in Crain’s Chicago business. You can view that article by clicking here.
Lubin Austermuehle a firm of Chicago business dispute lawyers handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat. Our Chicago business lawyers with offices near Aurora and Naperville have substantial experience in restrictive covenant and breach of contract cases, and we are proud of our record of strong results. We have successfully represented a number of doctors in non-compete, partnership and other business disputes. We understand the complexities of physician partnership and non-compete agreements.
Lubin Austermuehle a Chicago business litigation law firm represents both plaintiffs and defendants in such cases, and can also help stop litigation before it starts by reviewing contracts to look for covenants and clauses that could create problems later. Our firm has also handled many shareholder and LLC disputes between owners of closely held corporations, and LLCs.
Based in Oakbrook Terrace and downtown Chicago, our Plainfield and Lisle non-compete agreement and business dispute lawyers take cases from Hinsdale and Winnetka and many other cities throughout Illinois, as well as in Indiana, Wisconsin and the entire United States. To learn more or set up a free consultation, please contact one of our Chicago business dispute lawyers through the Internet or call toll-free at 630-333-0333 today.
Lubin Austermuehle’s Oak Brook, Deerfield, and Schaumburg litigation attorneys have more than three decades of experience helping clients unravel the complexities of Illinois and out-of-state non-compete and trade secret theft laws. Our Chicago business dispute attorneys also represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners, shareholders and LLC members as well as lawsuits between businesses and and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Oak Brook, near Wilmette and Lake Forest, we serve clients throughout Illinois and the Midwest.