Covenants not to compete, also known as non-compete agreements, are often used by businesses to prevent their employees from leaving the company and then using the knowledge they gained to compete with the employer within the same geographic territory. Such agreements are usually signed by an employee upon accepting employment, and are often intended to protect trade secrets or prevent pilfering of a business’s clients by former employees. They usually restrict a former employee from operating the same type of business or working within the same industry, within a defined territory, for a finite amount of time, which can be anywhere from one to three years.
Illinois, like most states, enforces covenants not to compete in employment agreements as long as they meet certain requirements. First, there must be some consideration, or promise, offered by the employer to the employee in return for agreeing to refrain from competing upon termination of employment. Typically, the employment itself is considered adequate consideration but only after the employee works for the employer for two years after signing the agreement. The employer can also pay reasonable compensation such a bonus when the employee signs the agreement. The agreement also must be reasonable in scope. The Illinois Supreme Court has established a rule that attempts to balance the interests and rights of the employer with those of the former employee while also considering the impact on the public. Continue reading ›