Can Illinois Employers Protect Themselves With Non-Compete Agreements?

 Posted on October 18, 2022 in Cook County Employment Attorney

There are a number of different types of concerns that can affect employers. Simply managing the day-to-day operations of a business is complex enough, but a variety of complications may arise that could affect a company's ability to continue operating successfully. For many business owners, unfair competition is a significant concern, especially when this competition comes from former employees or others who may have inside information that could give them an advantage in the marketplace. 

To protect themselves against these issues, employers may have options, including entering into non-compete agreements with employees or other parties. Non-compete agreements are contracts in which a person agrees not to compete with the employer for a period of time after the employment relationship has ended. Non-compete clauses may be included in employment contracts, severance agreements, or other types of contracts, and they are typically used to protect an employer's business interests, such as customer lists and trade secrets.

Issues Affecting Non-Compete Agreements in Illinois

In Illinois, non-compete agreements are governed by the Illinois Freedom to Work Act. This law limits the ability of employers to impose non-compete agreements on employees, since these "restrictive covenants" may affect an employee's ability to find gainful employment. Non-compete agreements may only be used if they are necessary to protect the employer's legitimate business interests. In addition, these agreements may only be used in cases where an employee earns at least $75,000 per year. Before entering into an agreement, an employee must be given at least 14 days to review the contract and consult with an attorney.

Non-compete agreements will only be enforceable if they meet the following requirements:

• The employee receives adequate consideration - An employer must provide a person with something of value in return for their agreement not to compete with them in the future. Two years of working for an employer after signing an agreement is generally considered to be adequate consideration. Other forms of consideration may also be considered to be adequate, such as providing a person with severance pay in return for signing a severance agreement.

• The restrictions must be no greater than is necessary to protect the employer's legitimate business interests - A non-compete agreement must be reasonable in scope and duration. That is, it must only last for a reasonable period of time and be limited to a specific geographic area, such as the region where the employer's business operates.

• The agreement must not impose undue hardship on the employee - If the restrictions imposed by a non-compete agreement would make it impossible for the employee to find work and earn sufficient income to support themselves, the agreement may not be enforceable.

• The agreement must not cause harm to the general public - A non-compete agreement may not be enforceable if it limits competition in a way that would harm consumers. 

Contact Our Schaumburg Employment Contracts Lawyer

Non-compete agreements can be a valuable tool for employers that will allow them to protect their businesses from unfair competition. However, it is important to make sure that these agreements comply with the laws in Illinois. An employer should consult with an Illinois employment law attorney to ensure that they are following the applicable laws. At The Miller Law Firm, P.C., we can provide guidance on the best ways to use non-compete agreements and other restrictive covenants, and we can make sure the terms of your employment contracts will be enforceable. We can also provide representation in contract litigation and other types of business disputes. Contact us at 847-995-1205 to set up a free consultation today.

Source:

https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=3737&ChapterID=68