The Top 5 Things to Consider When Drafting a Non-Compete in Chicago
Businesses Protect Valuable Assets from Competitors in Today's Changing Landscape3 min read
In today's ever-changing and highly competitive business landscape, employers are increasingly seeking to protect their valuable assets like client lists, processes, and trade secrets. One of the best ways to protect these assets is by having employees agree to a non-compete agreement. Non-compete agreements are popular tools in the business world and are utilized by employers of all sizes, whether small businesses or big corporations.
Entering into a non-compete agreement can be a complex process, however, so there are several points employers should consider before doing so. Here, we highlight the top five things to consider when drafting a non-compete agreement in Chicago, including important regulation, the types of restrictions allowed, and enforcement factors.
Chicago’s Legal Landscape
The first point to consider when thinking about drafting a non-compete agreement in Chicago is the legal landscape. Illinois is unique in that it enforces both “blue pencil” and “red pencil” statutes with regard to non-compete agreements.
Under a blue pencil statute, the court can discount or modify a provision in the non-compete agreement if it is found to be overly broad or impossible to enforce. Meanwhile, under a red pencil statute, the court can strike down the non-compete entirely if it is overly restrictive.
In addition, employers should also be aware that Chicago has certain additional restrictions on non-compete agreements. For example, Illinois prohibits employers from requiring employees to agree to non-compete agreements after they’ve already been hired, except in certain circumstances. Chicago is also one of several cities that has passed an ordinance restricting employers from enforcing non-compete agreements on low-wage employees.
Furthermore, employers must ensure that the non-compete agreement conforms to the Illinois state laws. Since non-compete agreements are governed by contract law, employers must follow the requirements of the specific state in which they’re operating. Rules vary from state to state, so it’s important to make sure you’re familiar with the applicable laws in Chicago before drafting a non-compete.
Types of Restrictions
The second point to consider is the types of restrictions you can impose on employees when drafting a non-compete agreement. Non-competes typically delineate areas where a former employee cannot compete with the employer, including geographic boundaries, customer contacts, and even the type of products or services that they’re competing in.
When drafting a non-compete agreement, the restrictions should be tailored to the company and the position in question. As a general rule of thumb, courts are more likely to approve agreements that are more specific and tailored to an individual employee's situation. It is also generally agreed upon that non-compete agreements should be reasonable in terms of their duration and geographic scope.
Enforcement Factors
The third key factor to consider is enforcement. Enforcing a non-compete agreement can be a time-consuming and expensive process, so it's important to make sure that the agreement is enforceable in the first place. This means that the agreement must be specific, reasonable, and not overly restrictive.
In addition, it’s important to consider the remedies for violations of the agreement. Remedies can range from monetary damages to an injunction or court order prohibiting the employee from engaging in certain activities. However, remedies must also be tailored to the specific situation – a court won't enforce an overly broad or vague remedy.
attorneys
Finally, employers should make sure to have an experienced attorney review any non-compete agreement before signing it. It's important to make sure that the agreement was drafted in accordance with the applicable laws and is structured in a way that will be enforceable in court.
Finding an attorney that is familiar with the Chicago jurisdiction is even more important when drafting a non-compete agreement in that city. UpCounsel has a network of experienced attorneys with extensive knowledge of Chicago law, making it easy to find the ideal lawyer for your legal needs.
At UpCounsel, we pride ourselves on providing unparalleled service and value to our clients. Our network of experienced attorneys have an average of 14 years of experience and each profile displays client ratings and reviews of recent work. So if you’re considering drafting a non-compete agreement in Chicago, look no further than UpCounsel.
Topics:
