Start-ups (specifically tech start-ups) generally don’t have much need for inexperienced or untrained students who just graduated and are now entering the workforce. Instead, they have a greater need of well-trained, knowledgeable, experienced workers to help them build their new venture into a profitable business. But they’re finding it increasingly difficult to hire those people in states that protect non-compete agreements.
Experts say that the rise of Silicon Valley as the heart of the technology world is directly related to California’s refusal to enforce any non-compete agreements whatsoever.
A non-compete agreement is part of an employment contract that prevents a worker from leaving their employer to work for a competitor. There’s usually a geographical limit of a few miles and a time limit around six months to a year, but companies are increasingly leaving those limitations behind and simply preventing their workers from ever working for any competitor.
The practice started with high-level executives who could potentially take sensitive trade secrets directly to a competitor, thereby ruining their former employer’s prospects. But more and more companies have been expanding their use of non-competes to cover all their employees – from those earning minimum wage, all the way to the top of the corporation.
Employee advocacy groups have fought hard against the use and enforcement of non-compete agreements and Big Business has fought just as hard in their favor. Large corporations trying to hold onto their employees at any cost have started looking for ways to punish their employees for leaving, rather than enticing them to stay.
A few years ago, LeapFox Learning, an education company located in Idaho, sued one of their former salespeople for allegedly violating her employee agreement when she went to work for one of their competitors – negotiating a significant salary increase as part of the deal. The lawsuit was settled outside of court, but it prompted the owners of LeapFox to pursue legislation that would make it easier for companies to prevent their workers from leaving.
The result is a new state law the Idaho legislation just passed that puts the burden on the worker, rather than the employer, to prove that the move does not have an adverse effect on their former employer’s business. Despite the provision that limits the application of the new law to high-level executives only, employee advocates are afraid it will be abused by companies to apply to workers at all levels and pay grades.
Not all businesses are in favor of the new legislation. Some recognize that non-compete agreements are a defensive measure against employee poaching, but that offensive measures could be more effective. Companies that raise their employees’ salaries (especially those employees who are most likely to get poached, such as software engineers), and address their employees’ wants and needs, will find their workers less tempted to leave for otherwise attractive positions at start-ups.
Despite the fact that Idaho has recently enjoyed a surge in tech start-ups, experts are afraid this new legislation change will prevent the formation of new start-ups in Idaho and tempt those that already exist to go to more employee-friendly states like California.
Our Chicago non-compete agreement attorneys have defended high level executives in covenant not to compete and trade secret lawsuits. A case in which our firm defended a former Motorola executive was covered in Crain’s Chicago business. You can view that article by clicking here.
Lubin Austermuehle a firm of Chicago business dispute lawyers handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat. Our Chicago business lawyers with offices near Flossmoor and Homewood have substantial experience in restrictive covenant and breach of contract cases, and we are proud of our record of strong results. We have successfully represented a number of doctors in non-compete, partnership and other business disputes. We understand the complexities of physician partnership and non-compete agreements.
Lubin Austermuehle a Chicago business litigation law firm represents both plaintiffs and defendants in such cases, and can also help stop litigation before it starts by reviewing contracts to look for covenants and clauses that could create problems later. Our firm has also handled many shareholder and LLC disputes between owners of closely held corporations, and LLCs.
Based in Oakbrook Terrace and downtown Chicago, our Highland Park and Lake Forest non-compete agreement and business dispute lawyers take cases from Deerfield and Bannockburn and many other cities throughout Illinois, as well as in Indiana, Wisconsin and the entire United States. To learn more or set up a free consultation, please contact one of our Chicago business dispute lawyers through the Internet or call toll-free at 630-333-0333 today.
Lubin Austermuehle’s Oak Brook, Westmont, and Hinsdale litigation attorneys have more than three decades of experience helping clients unravel the complexities of Illinois and out-of-state non-compete and trade secret theft laws. Our Chicago business dispute attorneys also represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners, shareholders and LLC members as well as lawsuits between businesses and and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Oak Brook, near Hinsdale and Elmhurst, we serve clients throughout Illinois and the Midwest.