Non-compete agreements are a common tool used by employers to protect their business interests. However, these agreements must strike a balance between safeguarding legitimate business concerns and respecting an employee’s right to pursue their career. Over the years, Illinois courts have issued several crucial decisions that provide guidance on the enforceability of non-compete agreements. In this blog post, we’ll explore some of these key Illinois court decisions and their implications for both employers and employees.
1. Reliable Fire Equipment Co. v. Arredondo (2011 IL 111871)
In this landmark case, the Illinois Supreme Court reaffirmed the importance of protecting legitimate business interests when evaluating non-compete agreements. The court clarified that non-compete agreements are enforceable only if they are reasonable in terms of duration, geographic scope, and the scope of activities restricted. The decision emphasizes the necessity of narrowly tailored agreements that protect the employer’s interests without unduly burdening the employee.
2. Fifield v. Premier Dealer Services, Inc. (2013 IL App (1st) 120327)
Fifield v. Premier Dealer Services introduced the concept of “adequate consideration” in Illinois non-compete cases. The Illinois Appellate Court held that in the absence of adequate consideration, a non-compete agreement may not be enforceable. The court suggested that two years of continued employment or some other substantial benefit could be considered adequate consideration. This decision placed greater scrutiny on the timing and terms of non-compete agreements, prompting employers to offer more substantial incentives to employees.
3. McInnis v. OAG Motorcycle Ventures, Inc. (2017 IL App (1st) 170029)
McInnis v. OAG Motorcycle Ventures delved into the issue of whether non-compete agreements could be enforced against at-will employees. The Illinois Appellate Court clarified that continued employment alone is insufficient consideration to support a non-compete agreement with at-will employees. This decision underscored the significance of adequate consideration and reinforced the principle that non-competes should not be imposed on employees without a meaningful quid pro quo.
4. Bankers Life & Cas. Co. v. Miller (2019 IL 123030)
In Bankers Life & Cas. Co. v. Miller, the Illinois Supreme Court addressed the “legitimate business interest” element in non-compete agreements. The court clarified that employers have a legitimate business interest in protecting customer relationships. However, it also stressed that a non-compete agreement must be reasonable in scope to be enforceable. This decision reinforced the need for a well-defined and limited scope in non-compete agreements.
Illinois court decisions on non-compete agreements have evolved to strike a balance between safeguarding legitimate business interests and protecting the rights of employees. Employers must carefully craft non-compete agreements that are reasonable in terms of duration, geographic scope, and the scope of activities restricted. Adequate consideration is a crucial factor, especially when entering into non-compete agreements with at-will employees.
For employees, understanding the enforceability of non-compete agreements and their rights is essential. Consulting with legal counsel is advisable when faced with the prospect of signing a non-compete agreement or when challenging the enforceability of an existing agreement.
These court decisions have helped shape the landscape of non-compete agreements in Illinois, emphasizing the importance of fairness and reasonableness in these contractual arrangements. It’s crucial for both employers and employees to stay informed about these legal developments to ensure that their rights and interests are protected.
Contact one of our non-compete agreement attorneys for a free consultation at 630-333-0333 or contact us online here.