Not All Non-Compete Agreements Are Created Equal

It has become increasingly common over the past few years for employers to include non-compete agreements in their employment contracts. In most cases, they are required to have geographic and time limits, meaning they can only be enforced in a certain geographical area for a certain period of time (usually six months to a year after termination of employment).

The restrictions on non-compete agreements vary from state to state, with a few states, such as California, refusing to recognize any non-compete agreements, even those signed in states that do recognize such contracts.

In one recent case against a realtor in Connecticut, Century 21 Access America successfully sued a former employee and obtained an injunction against her. Under Connecticut state law, non-compete agreements are recognized and enforceable.

Vassilia Mazzotta’s employment agreement with Century 21 stated that she would not work for a competitor or solicit clients within 15 miles of Century 21’s offices for a period of two years after termination of her employment with Century 21.

Shortly after resigning from her position as a real estate broker with Century 21, Mazzotta went to work for a competing real estate company and continued to provide services and solicit clients within 15 miles of Century 21’s offices.

When Century 21 filed their complaint against her, Mazzotta argued that she had signed her employment agreement with Century 21 under “duress.” Although job hunting can be stressful, and many employers do require their workers to sign non-compete agreements as a condition of employment, the court was not convinced that Mazzotta’s situation was everything she made it out to be. The court pointed to the considerable benefits Mazzotta received under the terms of her contract, including enhanced commissions, suggesting she had significant bargaining power when negotiating the terms of her contract.

When talking about the training Century 21 provided, Mazzotta made it seem like she wasn’t provided with much information or training, and what she was provided didn’t have much of an effect on her ability to perform her responsibilities as a real estate broker. But on further examination, the court found that Mazzotta was provided with, not only substantial training that was (or should have been) enough to make her a competent real estate broker, but that she had also been given access to the company’s client base, along with its sales methods. That training and information qualify as a considerable asset that Century 21 has a legitimate business interest in protecting, which the court took into account when deciding to grant the company’s request for an injunction.

Nevertheless, Mazzotta argued that the terms of her contract were overly broad and restrictive, and therefore not legally enforceable. She brought in another real estate professional to help her make that case, but when her witness was cross-examined, they admitted that the restrictions included in the non-compete agreement were neither unusual nor unreasonable given the nature of Century 21’s business.

Furthermore, in her resignation letter, Mazzotta had included a statement that she understood the terms of her employment contract with Century 21 and that she accepted any consequences that would result from her termination and ensuing work.

Mazzotta also claimed that she had only been with Century 21 for one year and argued that was not sufficient time to gain enough information to be a threat to them working in a nearby real estate office. But the court found that she had been associated with another firm that had been purchased by Century 21, suggesting she was much more familiar with the office and its client base than she admitted.

Mazzotta probably tried that approach because it had worked for another realtor who had been sued by Century 21 for violating her non-compete agreement, but in that case, the realtor had only been with Century 21 a short time, had only sold one property, and had not been given access to Century 21’s confidential information after they finished training her.

Our Chicago non-compete agreement lawyers with offices near Oak Brook, Wilmette and Elmhurst have substantial experience in restrictive covenant and breach of contract cases, and we are proud of our record of strong results. We represent 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. With offices near Aurora and Geneva and in downtown Chicago, our Chicago restrictive covenant lawyers take cases from Lake Forest and Hinsdale 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 us online or call toll-free at (833) 306-4933 or locally at (630) 333-0333 today.