All contracts are subject to scrutiny before the law, especially when a dispute arises, including employment ones. The importance of fair and just contracts always comes up in the media spotlight and the courts. If a contract is too much in favor of one party who has far more bargaining power over the other party, it may violate the law. Employers should take this into consideration when drafting terms and have them reviewed by attorneys who are familiar with restrictive covenants within the scope of employment law.
One Clause Cannot Fit All Employees
A “one size fits all policy” when drafting restrictive covenants, will risk the clause being unenforceable. This is especially true if the demand is unreasonable or not necessary to protect legitimate business interests. When entering into the employment domain, covenants are imposed on employees restricting what they can and cannot do once they leave the job. Violations and restrictions are what employers often look for when they wish to seek enforceability of a contract that was entered into when employees decide to move elsewhere. Typically, such agreements prohibit the competing with an ex-employee for a certain period after the employee has left the business, or prevents the ex-employee from soliciting or dealing with customers of the business by using knowledge of those customers gained. This issue was a reminder in the case of Dumrauf, where the Courts later deemed teh non-compete agreement to be unenforceable because it was too restrictive.
The Illinois Attorney General, Lisa Madigan, required WeWork Inc. to end its use of an overly broad clause for almost all of its employers. Overall, over 1,800 employees agreements were altered to become a less restrictive version and 1,400 agreements were rendered too restrictive voided. The agreement went so far as to prohibit all employees from taking jobs with competitors, including cleaners, assistants, baristas and others who earn close to minimum wage. It was viewed as being a career obstacle which did not allow people to make better decisions with their lives. The clause appeared to be one set for all employees and barred them for working with competitors after they left. It also prohibited a worker from working anywhere where WeWork did. That is a cost that WeWork had to bear as a social stigma in society, legally and will have a negative image in the minds of future employees as well. Building back trust and rapport will be difficult.
What are the lessons we can learn from both situations?
Employee type will matter when it comes to non-compete enforcement. The fairness and just nature of the clause will be weighed against the wage allowance. Overly restrictive clauses will most likely be rejected. The type of information willing to be kept confidential will include client details as well as the type of knowledge gained. On the face of the agreement, those types of clauses will not be overturned or redrafted. Clauses need to protect business interests legitimately and not be oppressive at the same time. Having the oversight of Counsel helps.
Based in Oakbrook Terrace and downtown Chicago, our Hinsdale and Willowbrook non-compete agreement and business dispute lawyers take cases from Evanston to Lake Forest 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.