Chicago-Area Non-Compete Lawyers
Our firm regularly advises clients about non-compete agreements. To learn more about non-compete agreements, click here, to read an article one of our lawyers co-authored for other professionals about non-compete agreements.
In a nutshell, 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.A typical non-compete agreement says something to the effect that “Employee agrees that he or she will not work for any similar business in the same or a similar role within 10 miles of Employer’s headquarters during employment and for 1 year thereafter.” The questions always is, can that be enforced.
In Illinois, non-compete agreements are only enforceable if they protect legitimate business interests. 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.
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).
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.