Naperville Business Lawyer Discusses Lawsuit Against Payday Lender Over Non-Compete Agreements

non-compete, Naperville business law attorneyA non-compete agreement is a contract between an employee and an employer in which the employee agrees not to work for a competitor during his or her current employment and, often, for a defined period of time after he or she leaves the job. Many employers require new employees to sign non-competition agreements before starting work or in some cases, after they have already begun working.

As a business law attorney and a small business owner, I understand that employers may use non-competition agreements to prevent previous employees from capitalizing on the goodwill developed with customers and competing with their original employer. I also recognize the value of protecting trade secrets and confidential business practices. Too often, however, employers attempt to use non-competes in ways that are unnecessarily restrictive.

Problems With Non-Competes

Courts often do not approve of non-competition agreements that limit a former employee’s right to earn a living. When deciding whether to enforce a non-compete agreement, the court will consider the employer’s legitimate business needs with the burden that the agreement places on an employee. If a non-compete agreement is found to be unreasonable in scope or duration, the employer may be forced to stop requiring them, and existing agreements may be set aside.

In some cases, the state itself may act in the best interests of employees to prevent the abuse of non-compete agreements. Such is the situation for a payday lender thy currently operates in Illinois.

Payday Loan Company Subject of Lawsuit

A Tennessee-based payday lending company with 33 stores in Illinois is under scrutiny after it was discovered that the store allegedly makes its employees sign overly restrictive non-compete agreements. The Illinois attorney general’s office is suing the chain—one of the largest private companies in the payday loan industry with more than 1,000 locations nationwide.

The lawsuit, which was filed in Cook County Circuit Court, claims that the chain’s policy effectively prevents employees from getting another job in Illinois. The lawsuit alleges that the stores use a non-compete agreement in order to retain their low-income workers and prevent them from finding higher-paying jobs. Upon being hired, job applicants at are informed that refusing to sign the non-compete agreement “will be grounds to rescind any employment offer made.” All employees of the store must sign the agreement.

The Illinois Attorney General’s office claims that the forced noncompetition agreements are in violation of the Illinois Freedom to Work Act. This act prohibits the use of non-compete agreements for employees who do not make more than the minimum wage. The minimum wage in Illinois is $8.25 per hour, but local ordinances have made it higher in Chicago and Cook County. The lawsuit seeks to prevent the payday lending store from further using non-compete agreements in Illinois and to void its existing agreements. The lawsuit also pursues a $50,000 penalty per violation for acts deemed unlawful with the intent to defraud.

Knowledgeable, Dedicated Business Law Attorneys

If you own a business and want to learn more about non-compete agreements, an experienced Naperville business attorney may be able to help. Contact The Gierach Law Firm for a confidential consultation today.

 

Sources:

Chicago Tribune

U.S. News and World Report