Non-Compete Agreements and Enforcement in Illinois

non-compete agreements, contracts, Illinois Business Law AttorneyAcross the country, more and more employers are requiring their employees to sign non-compete agreements. These documents, or clauses within an employment contract, are typically designed to keep employees—along with former owners and investors—from going to work for a competitor within a certain time frame. Many of my business-owner clients have come to me with questions about non-compete agreements, and it is important to understand how the state of Illinois views such contracts.

Drafting Enforceable Non-Compete Agreements

Business owners are certainly within their rights to try to protect their investment and their company. A non-compete agreement, often in conjunction with a non-disclosure agreement, can provide one method for an owner to do so. However, some non-competes are drafted in such a way that the rights of the employee may be unduly restricted, leading to issues in enforcement.

To create a workable and responsible non-compete agreement, work with an Illinois business contract attorney to focus on four specific criteria:

  • Scope of competition: Remember that, depending on the nature of your business or industry, your employees may be able to remain in the industry without affecting your business. Do not try to force them out completely, as that may be unreasonable. For example, if you own a company that builds farm equipment, your salespeople may be restricted from selling tractors for another company, but preventing them from getting a job selling automobiles in your town would likely be unnecessary.
  • Time frame: Most non-compete agreements are generally enforceable up to about 24 months, but the time restrictions on your agreement should, again, be reasonable to your area of business.
  • Geographic limitations: Your non-compete agreement may look to restrict competition for a time, but physical distance is certainly a factor in reasonable competition. Are your customers likely to drive more than 20 miles to give their business to a competitor? If not, then consider limiting your non-compete to a smaller area.
  • Protect legitimate business interests: If you are even considering a non-compete agreement, you must be able to specify why you need one. Proprietary practices or client information, of course, can and should be protected. However, if your business practices and related information are publicly available, simply preventing an employee from finding work after leaving your company will probably be considered overly restrictive.

Illinois Enforcement Concerns

The state of Illinois takes the rights of workers very seriously. As such, courts around the state have, historically, taken a less than favorable view on overly restrictive non-compete agreements. However, there were also a number of seemingly conflicting case law decisions which created confusion for employers. In 2013, the Illinois Supreme Court set a new standard for the enforceability of non-compete agreements, which still requires objective consideration of the individual situation.

In Reliable Fire Equipment Company v. Arredondo, the state’s high court established that the “totality of all of the circumstances” must be considered to ensure that a non-compete is reasonable in three separate ways: 1) The limitations are no greater than necessary to protect a legitimate business interest; 2) there is no undue hardship to the employee; and 3) there is no negative impact to the public. When a non-compete agreement is challenged, a court will only enforce it if it is found to be in line with the requirement listed.

Contact a Naperville Business Contract Attorney

If you are looking to protect your business interests and would like assistance drafting a non-compete agreement that will be fully enforceable within Illinois, contact an experienced Naperville business contract attorney. Our knowledgeable team can help you create an agreement that balances your needs and the rights of your employees. Call 630-756-1160 today to schedule a consultation.