What Employers Need to Know About Using Non-Compete Agreements

In today’s competitive business landscape, employers will often need to take steps to protect proprietary information and prevent unfair competition by former employees. Non-compete agreements can be effective tools for addressing these issues. Business owners in Illinois will need to understand the laws governing the use of these agreements, and they can work with a business law attorney to make sure they have the proper protections.

Understanding Non-Compete Agreements

Non-compete agreements or covenants not to compete are legal contracts that prevent an employee from entering into competition with their former employer after leaving the company. These agreements may be included in an employment contract or severance agreement, and they may restrict a person from working for other employers or performing work that was similar to the functions of their previous position. Restrictions may apply for a specified period of time and within a limited geographical region. These agreements are designed to protect a company’s trade secrets, sensitive information, client data, and relationships from being used by former employees for personal advantage or competitive business gain.

The Validity of Non-Compete Agreements in Illinois

In Illinois, non-compete agreements are enforceable provided they meet certain criteria. Under the Illinois Freedom To Work Act, non-compete agreements are prohibited for employees earning less than $75,000 per year. An agreement must be reasonable in terms of time duration, geographic area covered, and the nature of restrictions imposed. It must also be necessary to protect an employer’s legitimate business interests, and it must not place undue hardship on the employee by preventing them from being able to earn a sufficient income. An employee must receive proper consideration in return for signing a non-compete agreement. This consideration may include the income earned when working for an employer for at least two years or other forms of compensation, such as severance pay. 

Safeguarding Business Interests With Non-Compete Agreements

When effectively drafted and implemented, non-compete agreements can safeguard a company’s trade secrets or other proprietary information while ensuring that an employer is rewarded for their investment in training employees and nurturing client relationships. A non-compete agreement can protect unique training methods, marketing strategies, proprietary processes or techniques, customer lists, and other confidential company information.

Tips for Drafting Enforceable Non-Compete Agreements

To ensure that a non-compete agreement will be enforceable, here are some issues an employer should consider:

• The agreement must protect a legitimate business interest.
• The restrictions should not impose excessive hardships on an employee that are not necessary to protect the identified business interests.
• Narrow geographical and time-based restrictions will be more likely to be enforceable.
• An employer should carefully consider the potential impact on the employee’s ability to find work in their chosen career field.

Contact Our Naperville Non-Compete Agreements Lawyer

Non-compete agreements can provide valuable protections for employers, but they must be properly drafted to ensure they meet the requirements of Illinois law. Employers must be careful to ensure that these restrictive covenants do not overreach, since agreements that are unreasonable may be found to be unenforceable. Business owners should always seek appropriate legal counsel when dealing with such intricate matters as non-compete agreements.

If your business needs to address employment law concerns, or if you are seeking legal guidance on how you can utilize non-compete agreements effectively, do not hesitate to reach out to the Gierach Law Firm at 630-756-1160. Our DuPage County business law attorney is prepared to assist you. We are proficient in drafting legally binding contracts tailored to your specific business needs. We encourage you to schedule a consultation and learn more about our legal services.