What Would a Court in Illinois Likely Require as Consideration for a Valid Non Compete Agreement

7. Is it permissible to offer different amounts of dollars in legal consideration to different employees of the company? Fortunately, a positive development for employees is that a recent decision (AssuredPartners, Inc.c. Schmitt, Il Appellate Court, October 27, 2015) concluded that non-compete obligations designed for fear and terror (e.B. – grossly exaggerated) may be completely unenforceable and may not be saved by a blue pencil clause. In this context, the changes increase the stakes for employers who initiate a civil action or arbitration to enforce a non-compete or non-solicitation obligation. In the revised law, predominant employees must ”recover all reasonable costs and attorneys` fees from the employer.” In addition, the court or arbitrator may grant another ”reasonable remedy”. Answer: No, Illinois` Freedom to Work Act (which went into effect on January 1, 2017) prohibits non-compete obligations with employees earning $13.00 or less per hour. These issues – which are often at the heart of enforcement concerns – are at the discretion of the courts, which must be decided on a case-by-case basis. Employers should consider including clauses on poaching, denigration and trade secrets in their employment contracts in addition to or as an alternative to non-compete obligations. While non-compete obligations are enforceable if their scope is reasonably limited, solicitation prohibitions, non-disparagement clauses, and trade secret clauses tend to be less scrutinized and do not require such strict restrictions on scope. The amendments require employers to refrain from entering into non-compete and non-poaching obligations with employees: restrictive covenants can generally be divided into three categories: non-solicitation clauses; non-compete obligations; and confidentiality provisions.

The amendments do not address the types of considerations that are considered ”professional or financial benefits”. The Freedom to Work Act previously prohibited employers from entering into non-compete clauses with ”low-wage workers,” which are effectively defined as including anyone earning less than $13.00 per hour. With the amendments to the law, employers are not allowed to commit to not competing with an employee who earns (or is expected to earn) $75,000 or less per year, and they cannot enter into a non-solicitation agreement with an employee who earns (or is expected to earn) $45,000 or less per year. Specifically, the law defines income more broadly than base salary to include bonuses, commissions, and gratuities, as well as elements of an employee`s total compensation that may not be reflected in a W-2, such as contributions. B to a 401(k) or flexible spending or a health savings account. For both non-compete and non-solicitation obligations, the thresholds must be increased every five years until January 1, 2037, when the annual minimum income limits are $90,000 for non-compete obligations and $52,500 for solicitation prohibitions. The Illinois Supreme Court in the Reliable Fire Equip decision. Co.

v. 2011 Arredondo established a so-called ”adequacy review” to determine the applicability of a restrictive agreement, with the court providing that a trade restriction is only appropriate if: The Illinois Freedom of Work Act applies to all non-compete obligations entered into on or after January 1, 2017, and this law prohibits private employers of any size, Entering into non-compete agreements with ”low-wage workers” (defined by law). as employees earning less than $13.00 per hour or earning the applicable federal, state or local minimum hourly wage, whichever is greater), and declares these agreements ”illegal and void.” The Illinois Attorney General may (with the power to subpoena) investigate any employer it believes to be ”involved in a model or practice prohibited by law” and, if necessary, file a civil lawsuit. In addition, the Attorney General may ask a court to impose a civil penalty of up to $5,000 for each violation or $10,000 for each repeated violation within five years. Goodwill developed by an employer in relation to customer relationships is an asset, so an employer can use a non-compete clause to prevent a former employee from capitalizing on that goodwill and competing with the original employer. Similarly, an employer may use a non-compete clause to protect its confidential information. For the information to be protected, the employer must generally demonstrate that it has taken reasonable steps to keep the information secret and that the information gives it a competitive advantage […].