What Is a Non-Compete Agreement?
In a nutshell, in Illinois, a non-compete agreement (sometimes mistakenly called a no-compete) is an agreement signed by an employee often upon being hired or upon acceptance of a severance package. The non-compete agreement typically limits an employee from competing with their former employer during and after the termination of employment. It does so by restricting the geographical area in which an employee can work if their new position operates in the same industry as their previous employment. Often, non-compete agreements will further protect the employer by restricting an employee from using an employer’s confidential information for his benefit or for the benefit of a subsequent employer. A typical non-compete agreement says something to the effect that “Employee agrees that he or she will not work for any similar business in the same or a similar role within 10 miles of Employer’s headquarters during employment and for 1 year thereafter.” The question always is, can that be enforced?
Are Non-Competes Agreements Valid In Illinois?
In Illinois, non-compete agreements are only valid if they protect legitimate business interests.
A legitimate business interest is determined from the totality of the circumstances, including:
- the near-permanence of customer relationships
- the employee’s acquisition of confidential information through his employment
- time and place restrictions
Whether or not a non-compete agreement is enforceable is dependent on the individual agreement at issue. Illinois courts, under certain circumstances, will enforce a non-compete contract when the terms of the agreement are reasonable. That is, the agreement will be deemed valid when it is limited in duration and geographical scope and when it is narrowly tailored to protect only that information that needs protection (ie. confidential or sensitive information).
Some of the relevant factors in Illinois to determine if a non-compete agreement is enforceable is:
- Whether the non-compete agreement is no greater than required to protect the employers business interest
- Whether the non-compete agreement imposes an undue hardship on the employee
- Whether enforcing the non-compete agreement would prove harmful to the public
Importantly, in determining whether an agreement is valid, courts attempt to balance the employee’s right to earn a living against the employer’s interest in protecting its information.
A court may deem an agreement unenforceable if it is:
- Overly restrictive
- Unfairly limits the ability of workers to earn a living
- Provides for an unreasonably long period of time
- Seeks to protect information that is not sensitive or confidential
Click here to read an article one of our lawyers co-authored for other professionals about non-compete agreements in Illinois.
Are Non-Competes Enforceable For Low Wage Employees in Illinois?
Illinois passed the Freedom to Work Law. This law prohibits employers from requiring low-wage employees to agree to non-compete agreements/covenants not to compete. Employees who are paid $13 per hour (or the applicable minimum wage) or less are considered low-wage employees. The Act provides that a covenant not to compete with a low-wage employee is “illegal and void”. Note: The Act does not appear to prohibit confidentiality agreements or non-solicitation agreements. The law is effective 1/1/2017
Are Non-Completes Enforceable For Physicians and Doctors in Illinois?
In Illinois, physicians and doctors can be subject to reasonable non-competes, but their enforceability depends in large part on how they are written and the purpose for them. Again, courts enforce restrictive covenants for legitimate reasons. Here is an article that one of our non-compete lawyers wrote regarding non-competes for doctors: “Physician Non-Complete Agreements in Illinois: Diagnosis—Critical Condition.
How Do I Get Out of My Non-Compete Agreement?
Clients often come to us and explain that they signed a non-compete agreement they did not read, and now they want to switch jobs. So, how do I get out of my non-compete contract in Illinois? The answer really depends on a few key factors, including:
- Were you given consideration (i.e., money) for your non-compete and how long did you work after signing your non-compete?
- What is your position and are there legitimate business interests being protected?
- What does the noncompete agreement really say? We find that in many occasions, non-compete and other agreements are poorly written. For example, they may be overly broad or unenforceable for another reason.
Nevertheless, even if you defeat your non-compete, doing so in court can be expensive. So, be very careful in dealing with restrictive covenants. Any non-compete agreement has some risk.
Here is a video that might help you understand whether your non-compete agreement is enforceable in Illinois: