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Non-Compete Lawyers in Chicago

Understanding Non-Compete Agreements in Illinois

Our Chicago noncompete lawyers have been leading the fights against unfair restrictive covenants for years in the Illinois courts, the legislature and the media.

In 2023, we submitted comments before the Federal Trade Commission about why non-compete and non-solicitation agreements are inappropriate in the workplace. Click here to read it.

In 2023, the Chicago Tribune published our Op-Ed explaining why non-competes are not appropriate in the workplace. [link to: Op-ed: Eliminating noncompete contracts will empower employees (] The text of the Op-Ed follows:

The Federal Trade Commission has proposed an imminent ban on noncompete contracts. Prohibiting these contracts is an important step toward assuring we still have access to the American Dream. It will help businesses innovate in our tight labor market, ensure workers are not stuck in dead-end jobs and make the United States more competitive with regards to our foreign counterparts.

If you’ve been employed, odds are that at some point you have heard of noncompete contracts, and there is a good chance you may have signed one. Historically, businesses used them with high-level executives to prevent them from taking trade secrets to competitors. However, in the last half century, many businesses have abused noncompete contracts by using them to avoid competition or prevent workers from leaving.

For example, I have defended in court non-English-speaking cleaning people who were sued for having the audacity to switch jobs in violation of their noncompete contracts. The Illinois attorney general once sued Jimmy John’sover its use of noncompete contracts for sandwich-makers. The list of noncompete abuses is long and gut-wrenching and there is no right to a free lawyer when a worker is sued for violating a noncompete contract.

Building upon and invoking existing antitrust law, the FTC proposes that noncompete clauses be barred as an unfair method of competition. The rule also would require employers to rescind any existing noncompete clauses. The evidence examined by the FTC demonstrates that noncompete clauses suppress wages, reduce competition and stifle innovation.

Workers bound by noncompete clauses regularly ask employment lawyers: “I signed a stack of onboarding paperwork on my first day on the job that had a noncompete. It isn’t enforceable, is it?” They are shocked to learn how much it will cost to “get out” of their noncompete contract when they are sued. As a result, few employees ever challenge noncompete contracts and instead reluctantly comply with them while giving up better job opportunities, resulting in less money for them and their families.

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From our Illinois Employment Law Handbook Chapter on Non-Competes:

Chapter 8

Non-Compete Agreements

What is a Non-Compete Agreement?  In Illinois, a Non-Compete Agreement 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 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.

In Illinois, non-compete agreements are only enforceable if they protect legitimate business interests. Reliable Fire Equip. Co. v. Arredondo, 358 Ill.Dec. 322, 965 N.E.2d 393, 396–97, 2011 IL 111871 (2011); Cronimet Holdings, Inc. v. Keywell Metals, LLC, 73 F. Supp. 3d 907, 915 (N.D. Ill. 2014).  A legitimate business interest is determined from the totality of the circumstances, including, for example, “the near-permanence of customer relationships, the employee’s acquisition of confidential information through his employment, and time and place restrictions.” Reliable Fire Equip., 358 Ill.Dec. 322, 965 N.E.2d at 403.

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 contracts 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 which needs protection (ie. confidential or sensitive information).

An overly broad non-compete in Illinois is not likely to be enforceable. 

  •  A Real Life Example:  In Saban v. Caremark Rx, L.L.C., 780 F. Supp. 2d 700, 711–12 (N.D. Ill. 2011), the court noted that “the language of [the] non-compete is unreasonable because of its canyon-like broad coverage, which has its genesis in the expansive definition of “Competitor” and “Competition.” As noted above, “competition” in the non-compete means “engaging in any activity for a Competitor of the Company in any capacity.”  “If the plain terms of the non-compete were enforced, [the employee] would be precluded from working in a wide variety of jobs which have zero relation to his work at Caremark. For example, the magistrate judge noted in the Report that Saban could not work as a grocery store manager if the grocery store had a pharmacy.”  “For example, under the terms of the non-compete, [the employee] could not serve as a ‘greeter’ at a Wal–Mart that had a pharmacy. That scope of restriction extends well beyond what is necessary for Caremark to protect its legitimate interests.”  This is a good example of when non-competes are too broad.

In essence, in order to be enforceable, the employer must be able to show it has a legitimate business interest in protecting the information it seeks to keep confidential. Some of the relevant factors in Illinois to determine if a non-compete agreement is enforceable is: 1) whether the non-compete agreement is no greater than required to protect the employers business interest, 2) whether the non-compete agreement imposes undue hardship on the employee, and 3) 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, or seeks to protect information that is not sensitive or confidential.

Use Caution Online:  In our experience, LinkedIn is the worst enemy of employees navigating the dangers of working at a new employer.   We have seen many situations where a new employee posts his or her new job and LinkedIn publicizes this to the employee’s connections.  The problem is that usually employees from the old job (where the non-compete or other restrictions exist) get notified of everything that is being done because they are still connected.  This is not to say LinkedIn is doing anything wrong; its business model seems to focus on promoting professional advancement.  But, when a former employer gets notified from LinkedIn, the former employee’s potential restrictive covenant/non-solicitation/non-compete issues are now front and center and there is evidence of this. 

Non-Competes for Low Wage Earners:  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”.