Chicago-Area Non-Complete Lawyers
To view an article that our Chicagoland employment lawyers co-authored on Illinois non-compete agreements, click here.
To view an article that one of our Chicagoland employment attorneys co-authored regarding Illinois physician employment non-complete agreements, click here.
In Illinois, non-compete agreements are only enforceable if they protect legitimate business interests. Reliable Fire Equip. Co. v. Arredondo, 358 Ill.Dec. 322, 965 N.E.2d 393, 396–97, 2011 IL 111871 (2011); Cronimet Holdings, Inc. v. Keywell Metals, LLC, 73 F. Supp. 3d 907, 915 (N.D. Ill. 2014). A legitimate business interest is determined from the totality of the circumstances, including, for example, “the near-permanence of customer relationships, the employee’s acquisition of confidential information through his employment, and time and place restrictions.” Reliable Fire Equip., 358 Ill.Dec. 322, 965 N.E.2d at 403.
Our Chicago area non-compete lawyers have extensive experience representing employees and employers in issues concerning employment contracts that contain non-compets.
In Illinois, a Non-Compete Agreement is an agreement signed by an employee often upon being hired or upon acceptance of a severance package. The non-compete agreement typically limits an employee from competing with their former employer during and after termination of employment. It does so by restricting the geographical area in which an employee can work if their new position operates in the same industry as their previous employment. Often, non-compete agreements will further protect the employer by restricting an employee from using an employer’s confidential information for his benefit or for the benefit of a subsequent employer.
Whether or not a non-compete agreement is enforceable is dependent on the individual agreement at issue. Illinois courts, under certain circumstances, will enforce a non-compete contracts when the terms of the agreement are reasonable. That is, the agreement will be deemed valid when it is limited in duration and geographical scope and when it is narrowly tailored to protect only that information which needs protection (ie. confidential or sensitive information).
An overly broad non-compete in Illinois is not likely to be enforceable. For example, in Saban v. Caremark Rx, L.L.C., 780 F. Supp. 2d 700, 711–12 (N.D. Ill. 2011), the court noted that “the language of [the] non-compete is unreasonable because of its canyon-like broad coverage, which has its genesis in the expansive definition of “Competitor” and “Competition.” As noted above, “competition” in the non-compete means “engaging in any activity for a Competitor of the Company in any capacity.” “If the plain terms of the non-compete were enforced, [the employee] would be precluded from working in a wide variety of jobs which have zero relation to his work at Caremark. For example, the magistrate judge noted in the Report that Saban could not work as a grocery store manager if the grocery store had a pharmacy.” “For example, under the terms of the non-compete, [the employee] could not serve as a ‘greeter’ at a Wal–Mart that had a pharmacy. That scope of restriction extends well beyond what is necessary for Caremark to protect its legitimate interests.” This is a good example of when non-competes are too broad.
In essence, in order to be enforceable, the employer must be able to show it has a legitimate business interest in protecting the information it seeks to keep confidential. Some of the relevant factors in Illinois to determine if a non-compete agreement is enforceable is: 1) whether the non-compete agreement is no greater than required to protect the employers business interest, 2) whether the non-compete agreement imposes undue hardship on the employee, and 3) whether enforcing the non-compete agreement would prove harmful to the public.
Importantly, in determining whether an agreement is valid, courts attempt to balance the employee’s right to earn a living against the employer’s interest in protecting its information. A court may deem an agreement unenforceable if it is overly restrictive, unfairly limits the ability of workers to earn a living, provides for an unreasonably long period of time, or seeks to protect information that is not sensitive or confidential.