Whether you’re a small business that needs to protect its confidential information from falling into the hands of a former employee or a retiring executive looking to protect your startup’s Intellectual Property (IP) from competitors, non-compete agreements are a common way to protect valuable corporate information in Chicago. While non-compete agreements are generally enforceable in Illinois, the reality is that every situation is different and it’s important to understand the nuances of a non-compete agreement before entering into one. Below are some frequently asked questions about working within the constraints of Illinois non-compete law.

What is a Non-Compete Agreement?

Non-compete agreements, also known as restrictive covenants, are contracts that prevent a person from working for a competitor, setting up a competing business, or otherwise infringing on the rights of an employer. These agreements can protect an employer from having their proprietary information or IP taken to a competitor, being taken advantage of by a former employee, or being otherwise held hostage by a former employee. This type of agreement is generally enforceable in Illinois, but with significant restrictions.

What Factors Does the Court Consider in Enforcing a Non-Compete Agreement?

When enforcing a non-compete agreement, a court will generally consider:

Whether the agreement is reasonable in its scope and length;

Whether an employee’s financial wellbeing would be substantially impacted by adherence to the agreement;

Whether the agreement would prevent an employee from engaging in any type of meaningful employment;

Whether the agreement is so narrow that it would effectively prevent an employee from engaging in any activity that could be seen to be competitive with the employer’s business; and

Whether the agreement is necessary to protect the employer’s legitimate business interests.

When determining whether to enforce a non-compete agreement, the court will carefully weigh the interests of both parties to ensure a fair outcome.

Are Non-Compete Agreements Valid or Enforceable in All Situations?

Non-compete agreements are only enforceable in certain situations, and courts in Chicago will not allow employers to overreach via non-compete agreements. Generally, the terms of the agreement must not be overly broad, and there must be a legitimate business interest for the employer. If the employer cannot demonstrate a legitimate business interest, the agreement is likely not enforceable.

In addition, non-compete agreements are generally void if they are entered into prior to or at the time of hire. In Illinois, the employee must also receive consideration in addition to the wage the employee will earn for entering into the agreement; for instance, a raise or promotion.

What Are the Penalties for Violating a Non-Compete Agreement?

If the non-compete agreement is found to be valid and enforceable, the employer will likely be able to seek an injunction to prohibit a current or former employee from engaging in activities that violate the agreement, as well as seek damages for any harm caused by the breach of contract.

Can an Attorney Help With Drafting a Non-Compete Agreement in Chicago?

Yes. It is always best to have an experienced attorney review and draft any contract, especially a contract as important as a non-compete agreement. An attorney will ensure that the agreement reflects the intent of both parties, and that it will be upheld if challenged in a court of law. An experienced attorney familiar with the intricacies of Illinois non-compete law will also be able to craft an agreement that strikes a balance between protecting a business’s legitimate interests and providing the employee with the opportunity to work in his or her chosen profession.


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