What is a non-compete agreement?
A non-compete agreement is an agreement that limits an employee’s ability to work in their profession or for a competing company for a certain period of time after they leave their job. These agreements are intended to protect an employer’s valuable assets, information, customer relationships, or training, and they can apply to employees in many different industries and positions, from CEOs to salespeople.
For example, if you work in the tech industry, you may have access to confidential information at your current job. If you signed a non-compete, the agreement may limit your ability to leave your job and work for a competitor in the same industry. A non-compete can be helpful for an employer, but it can also make it harder for an employee to find a new job in their field.
Illinois law places restrictions on when non-compete agreements can be enforced. Generally, a non-compete must be reasonable and necessary to protect the employer’s legitimate business interests. Illinois law also limits the use of non-compete agreements for employees below certain income thresholds.
Non-compete agreements can have a major impact on your career and ability to find new employment. If you have questions about a non-compete agreement or your employer is trying to enforce one against you, a Chicago non-compete lawyer can review your agreement and help you understand your rights and options under Illinois law.
Are all non-competes valid?
No. A non-compete is a contract, so it must meet certain requirements to be valid. The requirements for an Illinois non-compete include:
- Adequate consideration: The employee receives something of value in exchange for agreeing to the non-compete.
- Valid employment relationship: The non-compete is part of a valid employment relationship.
- Legitimate business interest: The non-compete is no greater than necessary to protect the employer’s legitimate business interests.
- No undue hardship: The non-compete does not create an undue hardship for the employee.
- Public interest: The non-compete is not harmful to the public.
The element where issues usually arise in an Illinois non-compete is consideration. Under Illinois law, adequate consideration generally means the employee worked for the employer for at least two years after signing the agreement, or the employer provided other professional or financial benefits that are sufficient consideration for the agreement.
What are the terms of a non-compete?
Non-compete agreements usually contain three elements:
- Length of time: how long the non-compete will be upheld
- Geographic location: where the employee can work after leaving
- Activities of the employee: what type of work the employee can do for another company
Non-compete agreements in Chicago and throughout Illinois are only enforceable to the extent their restrictions are reasonable and necessary to protect the employer’s legitimate business interests. If your agreement is too long, covers too much territory, or restricts too many job activities, your agreement may be over-broad and unenforceable as written. That does not mean you can disregard it. You should consult with an attorney about your rights and options under Illinois law.
I am starting a new job and my employer asked me to sign a non-compete, what do I do?
If you are worried you may be signing your future career away, consult with a Chicago non-compete lawyer first! An attorney can review the contract with you and make sure you understand the terms of the non-compete and negotiate them if needed. Non-compete agreements can be negotiable. The best time to negotiate is before you sign. If you have competing job offers, but one has a restrictive non-compete, you may be able to negotiate better terms. With non-competes, an ounce of prevention is worth a pound of cure.
I am planning on resigning soon, but I signed a non-compete when I started. I want to find a new job in the same field, is that possible?
If you are in this situation, it would be best to contact a Chicago non-compete lawyer before taking further steps. You must review the non-compete you signed and apply the facts to better understand what it will restrict you from doing. If you have any doubts about moving forward from your current job because of a non-compete, it is time to consult with an Illinois non-compete attorney.
I left my job a few months ago and have since started a new job in the same field. My old employer is now suing me or threatening to sue me regarding a non-compete I had signed with them. What do I do?
Talk to a Chicago non-compete lawyer as soon as possible! There may be information in the non-compete you signed that would make your employer’s case against you very challenging for them. Or, you may be taking actions that are extremely harmful to you. You should consult with a legal professional to help you review and better understand your situation under Illinois law.
I am quitting my job, and I signed a non-compete that said I cannot work for any other company in this industry in Illinois. Is this valid?
It depends. Illinois law requires non-compete restrictions to be no greater than necessary to protect an employer’s legitimate business interests. A non-compete that bans you from working in an entire industry may be too broad, depending on the circumstances and the work you did for your employer. If you find yourself in this situation, you should contact a Chicago non-compete lawyer.
What is seen as reasonable for a geographical scope for non-compete?
Non-competes are more likely to be enforced when the agreement does not restrict the employee beyond the area where he or she worked for the employer. Sometimes, that area may be limited to a specific geographic area, while in other situations it may be broader. The details of each situation are incredibly important.
What is seen as a reasonable time frame for a non-compete restriction?
There is no clear-cut answer to this. An unlimited restriction may be unreasonable and unenforceable. Not all non-competes need to specify duration of the agreement, but a court will only enforce restrictions that are reasonable under Illinois law. The reasonableness of a duration usually depends on the industry, the employee’s role in the company, the employer’s legitimate business interests, and other similar factors.
What is seen as a reasonable scope of activity for a non-compete?
Again, there is no clear-cut answer here. Illinois courts generally look at the employee’s relationship with the employer’s clients, the employee’s access to confidential information, and the type of work the employee performed when determining whether a non-compete is reasonable. A valid non-compete can restrict an employee from working for competitors or performing certain types of work, but the scope of the restriction must be reasonable and necessary to protect the employer’s legitimate business interests. The details of each situation are incredibly important.
How is a non-compete dispute resolved?
It varies on a case-by-case basis. Your lawyer will be able to give you an idea of possible outcomes for the case. If you have yet to sign the non-compete, this may be settled by working on the terms of the agreement with your employer.
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