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Non-Compete Archives

Seneczko Wins Default as Discovery Sanction in Duty of Loyalty Claim

Wessels Sherman Attorney Alan Seneczko, managing shareholder of the Wisconsin office, recently won a huge decision in a claim against a former executive for breach of his duty of loyalty to the company (among other claims). The company, Storage Battery Systems, suspected its director of sales was using his position and the confidential information he acquired during his employment to funnel the company's business opportunities to his own company, in competition with and in violation of his duty of loyalty to the company and his non-compete agreement. See, Storage Battery Systems, LLC v. Glenn Wilder and Professional Power Engineering, LLC, Case No. 17cv1244 (Wis. Cir. Ct., 01/17/19).

Illinois Workplace Transparency Act

On June 2, 2019, the Illinois General Assembly approved the Workplace Transparency Act providing certain protections concerning sexual harassment in the workplace and imposing significant new obligations on Illinois Employers. This Bill was signed into law by Governor Pritzker in June 2019 and the provision of the new bill become effective January 1, 2020.

Illinois Employers Should Not Go Overboard With Non-Compete Agreements!

In order to have non-compete agreements which have a chance of being found legally enforceable by an Illinois judge, Illinois employers must carefully figure out the scope of activities to be restricted by their proposed non-compete agreements. Employers relying on the protection of a non-compete agreement naturally want to protect the company's legitimate business interests. The problem is that a one-size-fits-all broad restriction is more comprehensive than a narrow restriction but runs the extremely high risk it will be judged unreasonably broad and therefore legally unenforceable in Illinois.

Twelve Commonly Asked Questions About Non-Compete Agreements In Illinois

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:

Non-Compete Statute Applies To No-Raiding Provisions

The enforcement of non-compete agreements in Wisconsin is governed by the provisions of Wis. Stat. § 103.466, which sets forth five requirements that must be met in order for the restriction to be enforceable. Over the years, the courts have found that these restrictions applied not just to traditional non-compete agreements, but also to agreements not to solicit customers, non-disclosure/confidentiality agreements, and no-hire agreements between two employers. It therefore comes as no surprise that the Wisconsin Supreme Court recently held that the restrictions found in § 103.465 also apply to "no-raiding" covenants, which restrict former employees from soliciting or "poaching" employees of their former employer.

Illinois Employers Should Use Caution with Having Low-Income Employees Sign Covenants-Not-To-Compete

The unemployment rate in Illinois continues to decline, as is the case nationally. As of the time of writing this article, the state wide unemployment rate in Illinois is 4.6% and numerous experts predict that this rate will go lower as the economy continues to improve. Some cities in Illinois have unemployment rates as low as 3.4%. What this means for employers is that it may become even more difficult to fill open positions.

Provisions of Non-Compete Law Apply to No-Solicitation of Employees Restraints

It is common, if not standard, for most non-compete agreements to contain a clause that prohibits the covered employee from soliciting current employees to terminate their employment in order to accept employment with a competitor. In essence, it prohibits the departing employee from raiding his/her former employer's valued employees. Until recently, the courts have never determined whether such constraints are subject to the requirements of Wis. Stat. § 103.465, which governs the enforceability of non-compete agreements. It now has, and they are.

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