Naperville Business Owners Should Carefully Consider Non-Compete Agreements

Non-compete agreements, officially called “covenants not to compete,” and also known as “non-competes,” are a tool used by employers to restrict what a former employee can do – most commonly who they can work for. This is done in an effort to prevent department employees from immediately going to work for a competitor, essentially using their job knowledge, skills, and contacts to benefit the competition.

However, as the use of non-compete agreements has increased in the current business climate, so has debate and uncertainty over the scope of these agreements. In December of 2011, the Illinois Supreme Court made an important ruling indicating that employer’s wanting to enforce a previously-signed non-compete agreement must demonstrate that they have a “legitimate business interest” in the terms of the agreement. The court’s unanimous opinion stated that judges should consider “the totality of the facts and circumstances of the individual case.”

Naperville Business Owners Should Carefully Consider Non-Compete AgreementsThe Supreme Court’s opinion disagreed with a previous ruling by Central Illinois’ 4th District Court of Appeals, which had ruled in 2009 that as long as a non-compete agreement was reasonable in its time and geographical terms, it was essentially enforceable.

That matter aside, one thing that is certain is that not every non-compete agreement is enforceable. Courts have consistently held that these types of restrictive covenants must not be overly inclusive, thus preventing a resigning or discharged employee from obtaining employment elsewhere.

Naperville business owners of all sizes should consider utilizing a non-compete agreement. When used properly, these important tools can prevent the loss of confidential information and customers. However, it’s essential that Illinois non-compete agreements be drafted by an experienced Naperville business lawyer. A poorly-drafted non-compete may not be enforceable – a knowledgeable Naperville business law attorney can ensure that any non-compete agreement used by Chicago-area business owners will hold up in court.