Illinois is a state where non-compete agreements can be enforceable if done with certain guiding concepts and wording. The following are the most common questions asked by Illinois clients who are considering the use of non-compete agreements:
1. Why does a non-compete agreement have to be "supported by consideration" even though both parties sign the agreement. Isn't freedom of contract enough?
Answer: No, it is not enough that each party (the employer and the employee) voluntarily sign the non-compete agreement. To be enforceable in Illinois, a non-compete agreement must be supported by some kind of valuable consideration such as money, a laptop computer, employment for a substantial period of time, etc.
2. Have Illinois courts determined how much money is adequate consideration?
3. Why do some Illinois courts say that simply "being hired" may not be adequate legal consideration to support a non-compete agreement?
Answer: Because an at-will employee can be fired at any time, some Illinois courts find that simply being hired may not be adequate legal consideration to support a non-compete agreement.
4. Do some Illinois court cases conclude that two years or more of continued employment will suffice as adequate legal consideration to support a non-compete agreement?
Answer: Yes. While there is no bright line rule of two years being sufficient, two years seems to be the opinion of several courts in Illinois.
5. Can a non-solicitation provision be included in a non-compete agreement?
Answer: Yes, this is frequently done. Non-compete agreements often have non-solicitation provisions in them under which the employee (for a stated period of time after leaving the company) must not solicit customers, employees (or independent contractors) of the company to leave and go elsewhere. Sometimes non-solicitation clauses are drafted in lieu of non-competes because courts view them more favorably than non-competes. (Non-solicitation clauses must also be supported by consideration.)
6. Is it legal in Illinois to request only certain employees in the company sign a non-compete agreement and not ask others to do so?
7. Is it permissible to have different dollar amounts of legal consideration offered to different employees in the company?
Answer: Yes, there does not have to be consistency in the amount of money offered to various employees as legal consideration for signing a non-compete agreement.
8. If there are modifications to the non-compete agreement, do the parties have to enter into a new non-compete agreement and does the employer then have to offer additional legal consideration to the employee signing the new agreement?
Answer: Yes, with rare exceptions.
9. Is it ok to put a non-compete provision into an employment agreement?
Answer: Yes, but not advised. If you do include the restriction in an employment agreement, it should not be "buried" in the employment agreement. The title of the employment agreement should be Employment Agreement Containing Non-Compete Provisions.
10. Is a non-compete agreement between an employer and a "low-wage employee" legal?
Answer: No, the Illinois Freedom to Work Act (which became effective January 1, 2017) prohibits non-compete agreements with any employee making $13.00 or less per hour.
11. Are non-compete agreements legal and enforceable in Illinois?
Answer: Yes, they are legal but they will only be enforceable in Illinois if the Judge believes the agreement is reasonable and warranted. You therefore don't know ahead of time if the non-compete agreement will be judged enforceable. But, at the very least, a carefully drafted non-compete agreement will hopefully serve as a strong deterrent.
12. Do all states across the U.S. have the same law regarding the legality and enforceability of non-compete agreements?
Answer: No, this varies from state to state.
If any readers want to discuss any aspect of non-compete agreements or have a non-compete agreement drafted, please contact Attorney Nancy E. Joerg at Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at [email protected].