This article discusses the importance and factors to consider when an employer has an employee enter into a contract restricting the employee from working for a competitor or starting its own business.
In this economy, an employers may be looking to add or replace employees, while employees may be looking for new employer or starting their own companies based upon the knowledge they obtained from their current employer. In Illinois, unless the employee has a contract or union agreement with the employer, all employees are at-will, who can be terminated at any time without any restrictions preventing the employee from working for a competitor.
As for consideration, the law is that if the employee signs a non-compete agreement, at the beginning of employment or as a condition of keeping the current employment, then the non-compete agreement would be valid, only if there was a substantial employment thereafter. Substantial employment is a fact-based decision depending upon the number of years that were previously worked and then time worked after the non-compete agreement is signed. For example, 7 months may be considered to short and the agreement will not be enforced, but 2 years is a sufficient amount of time.
Validity Of Agreement Itself :
Whether the non-compete agreement is valid is a fact specific case and considered, in light of the following factors: (1) must be narrowly tailored to protect the employer’s legitimate business interest; 2) does not prevent the employee from obtaining gainful employment in a reasonable geographical area; and 3) does not harm the public by eliminating competition.
In considering the employer’s legitimate business interest, the Court would consider the following: