Understanding Non-Compete Agreements: Legal Implications and Employee Rights

What Are the Legal Implications of Non-Compete Agreements?

Non-compete agreements are a form of restrictive covenant for employment in Illinois. Like other restrictive covenants, non-compete agreements are facing increased pushback from worker advocates and state government. New laws have been implemented to look after employees’ legal rights and somewhat limit the power of an employer’s non-compete agreement contract. Because of this, many existing non-compete agreements may need revision, and future non-competes need to ensure that they meet the legal requirements for compliance in order to be enforceable under the law.

A non-compete clause is meant to prevent employees from leaving a company and drawing business away from their former employer. Non-compete clauses may prevent former employees from going to work for a direct competitor, opening a new business by using the information learned from the former employer, using marketing tools taught by the former employers, and using other systems learned while under the employee of the former employer.

Non-compete agreements are useful for employers looking to limit the damage that a former employee could potentially do to their business. Non-compete agreements are not as well-liked by employees, however, who believe that they limit their employment possibilities into the future.

Are Prospective Employees Required to Sign Non-Compete Agreements?

No, prospective employees are not required to sign non-compete agreements. However, not signing the clause may end up costing you your potential job offer.

In some cases, it may be possible to negotiate with employers and argue against the need for non-compete agreements or otherwise alter those agreements to suit you better. However, this is not always possible. If signing the non-compete agreement is paramount to the employer, then not signing it may result in you not getting the job. Whether this is legal depends upon the facts of your case and the reasonableness of the proposed restrictive covenant.

Can Workers Be Asked to Sign Non-Competes After They’ve Been Hired?

It is legal for employers to ask already hired employees to sign new restrictive covenants after they have been hired.

You may be asked to sign a non-compete agreement even after you get the job. Whether it is legal to take adverse action against you for refusal to sign the agreement is another matter. If your employer threatens your job because you are apprehensive about signing the non-compete clause, don’t hesitate to get in touch with our law firm for legal guidance.

Is Two Years of Employment Required for a Non-Compete Agreement to Be Enforceable?

According to the Illinois Freedom to Work Act, an employee must have worked for their employer for at least two years after signing the non-compete contract for it to be enforceable.

Alternatively, the employer could otherwise provide ‘adequate consideration’ to make signing the non-compete agreement worthwhile. Under the law, provided the employer did not pay additional consideration beyond at-will employment, an Illinois worker could theoretically work for one year and 364 days without violating their non-compete agreement.

What is Considered a Reasonable Geographic Scope?

It depends. Courts tend to consider many factors in relation to one another when deciding what is ‘reasonable’ geographic scope.

If the geographic scope is broad (the entire state, for example), the restrictive covenant is more likely to be enforceable if the duration of the non-compete agreement is short. If the geographic scope is broad and the clause is meant to exist for a long time, courts may deem the contract unenforceable.

What is a Reasonable Duration for Non-Compete Agreements?

The length of time for a non-compete agreement will be reviewed on a case-by-case basis. Often, like the geographic scope, these matters are considered in conjunction with one another.

In general, a non-compete agreement is designed to protect valuable info for as long as that information has value to the company. Lifetime bans on sharing unique business information are not unheard of.

Do Non-Compete Clauses Require Considerations?

In certain situations, an employer may pay their employees extra money (consideration) in return for the employee signing the non-compete clause. However, this is not required in all cases.

When Illinois employers do provide consideration to their workers, their non-compete agreements may be more solid and enforceable.

What if a Signed Non-Compete Agreement Prevents a Worker from Making a Living?

Illinois courts are reluctant to enforce non-compete clauses that prevent workers from finding any employment. These contracts may be considered too broad and too restrictive.

What Could Be the Consequences of Violating a Non-Compete Clause?

Sometimes, employers will do nothing when a former employee violates their non-compete agreement. However, it is wise not to count on this level of forgiveness.

Businesses have the legal right to sue and take former employees to court for violating their restrictive covenants. Because a violation of a restrictive covenant can cause harm to the employer, courts will often expedite procedures in these types of cases. If your former employer requests an injunction or a restraining order against you, it may be only a matter of days before you have a hearing scheduled before a judge.

Should You Speak with an Employment Lawyer Before Signing a Non-Compete Agreement?

It is highly advisable for anyone faced with the prospect of signing non-compete agreements to consider first consulting with legal professionals experienced in Illinois business and employment law.

Our law firm has years of experience helping both employees and employers navigate the ever-changing legal landscape of employment and business law, and we would be proud to represent your legal rights as you consider whether signing a non-compete clause is the right move for you.

Contact Us for a Case Evaluation

If you are being asked to sign a non-compete agreement and you do not fully understand the ramifications of such a clause, it is important to consult with an experienced employment lawyer for legal assistance. Our law firm would be proud to assist you and help you determine whether or not you should sign your non-compete agreement.

Schedule your initial consultation by contacting our Deerfield, IL, law offices at 847.654.9200.