Employees are often subject to non-competition or non-solicitation agreements which place restrictions on the employee after leaving his or her employment. These agreements generally prohibit employees from competing with the former employer for a period of time. Businesses can have legitimate reasons to subject employees to these types of agreements. For example, companies often require non-compete agreements when employees are in a position to misappropriate confidential trade information, or to prevent employees from misappropriating the company’s customer relationships.
However, many individuals are subject to these restrictive agreements mandated by employers without any legitimate business reason. This can lead to individuals being unable to find work because they are subject to a likely-unenforceable non-compete clause. If you are contemplating signing a restrictive covenant, or are going through a non-compete dispute, contact an employment attorney to discuss your rights.
Enforceability of Non-Compete Agreements in Illinois
In order for non-compete or non-solicitation agreements to be enforceable, the contract must be (1) no greater than is required for the protection of a legitimate business interest of the employer; (2) does not impose undue hardship on the employee; and (3) is not injurious to the public. Reliable Fire Equip. Co. v. Arredondo, 965 N.E.2d 393, 396 (Ill. 2011). In evaluating the enforceability of a non-compete or non-solicitation agreement, the analysis hinges on the totality of the facts and circumstances of the individual case; there is no “inflexible formula.” A non-compete can be enforceable in a certain set of circumstances, but the same non-compete can be unenforceable in another.
Another critical consideration in evaluating the enforceability of a non-compete agreement is whether consideration was adequate. Consideration is a required element in any contract. Put simply, each party to a contract is required to receive something as a term of entering into a contract; there must be a quid-pro-quo. Consideration is the performance or promise of performance that each party receives in exchange for entering into the contract. Courts will generally not evaluate the adequacy of consideration; that is, whether each party to the contract receives enough consideration in entering the contract. Rather, Courts generally only review whether there is any consideration for each contract party.
In the non-compete context, Courts will break this general rule and evaluate whether an employer’s promise of at-will employment is adequate consideration for an employee to sign the non-compete or non-solicitation agreement. Courts have found a continued employment for a “substantial period of time” beyond the threat of discharge is adequate consideration to support the agreement. See Prairie Rheumatology Associates, S.C. v. Francis, 24 N.E.3d 58, 62 (Ill. App. 3d Dist. 2014). As a general rule, Courts have found continued employment of at least two years is adequate consideration.
Illinois Labor and Employment Attorney
If you are subject to a Non-Compete or Non-Solicitation Agreement, call, email, or message Osborne Employment Law if you have questions. It is important to keep in mind that an employee can take a number of proactive steps when facing a non-compete dispute, such as filing a declaratory action in a chosen forum before the employer has the ability to file suit. Contact an employment law attorney to evaluate your situation.