February 2014

To employers: want your employees to be covered by non-compete covenants? You're going to have to pay them for it

An appellate court in Illinois, a state that, unlike California, enforces "reasonable" employment non-compete covenants, has ruled recently that a non-compete covenant must be supported by at least two years worth of employment. Fifield v. Premier Dealer Services, Inc. (IL Ct. App. 2013). Here's a compelling summary by the legal team that successfully prosecuted the case on behalf of the employee. The Supreme Court of Illinois has declined to review the case, making Fifeld the law of the land of Lincoln (at least in large part).

Even if the employee signed the non-compete agreement at the outset of employment, the covenant will not be enforceable until the employee has worked for two consecutive years. In other words, employers cannot hire and fire within a week and expect that employee to be under an enforceable non-compete clause. The result is the same even if the employee resigns.

If more courts across the country adopt the notion that a non-compete covenant in an at-will employment relationship must be supported by more than the mere act of employment, non-competes, as they are now commonly utilized, will either be made extinct or become a compensation-driven topic. It may only be a matter of time before a non-compete covenant, at least among the skilled and professional classes, will be bargained for.

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