Non-Compete Agreements: A Not-So-Bright Line In Illinois Courts?
The Illinois courts are conflicted – should they use a bright line rule when hearing cases involving violated non-compete agreements? A majority of the courts in Illinois think no, but some judges see the benefits. The Illinois Supreme Court has not yet made a decision, but what do you think? First, some background.
It is not uncommon for new employees to sign a non-compete agreement when they are hired. What often happens is that signing the agreement is a prerequisite to being hired, and the employees receive employment in exchange for their signature. As we have seen in court cases over the years, sometimes people violate non-competes, but not all are punished. The reason for that is the issue here.
In the past, Illinois courts have found that when an employee violates a non-compete they are not liable unless the non-compete was both reasonable and supported by adequate consideration find this. Reasonableness considers things like geographical limitations and time span, but adequate consideration has proven a little trickier for Illinois courts. The 2013 case Fifield v. Premier Dealer Servs., Inc. solidified the concept that if the only consideration for a non-compete is employment, the employee must be employed for at least two years in order for it to have adequate consideration and therefore be valid.
Since Fifield, the courts have been mulling that rule over. Most judges do not believe that the Supreme Court would adopt this as a bright line rule to be applied to all cases involving non-competes, citing significant concerns. For example, if this were the rule, employees could use it to their advantage, staying with their employer for just short of two years and then leaving and violating their non-competes with no repercussions. The judges skeptical of the rule have pointed out other important considerations, such total compensation, including benefits, and whether the employee resigned or was fired. For example, in some cases, employment may be the only consideration, but the employee may be receiving other benefits like gym memberships or commission. Or, the employee may leave on his own to work for a competitor, but be able to directly compete due to the time period.
The Illinois Supreme Court has not yet made a decision regarding the issue, but the judges who are against the application of the bright line rule have made good arguments against it. There are clearly ways that the rule could be exploited, creating an opportunity for employees to take advantage of their employers. While a bright line rule may be helpful in some cases, this one seems as though it would do more harm than good.