Client Alert - Employment Law Update
Illinois Appellate Court Makes it Easier to Enforce Non-Compete Agreements
An Illinois Appellate Court recently decided a case that potentially reshapes the landscape of non-compete law. For the time being, the opinion eliminates a key hurdle in certain areas of the state to enforcing non-compete agreements.
The case of Sunbelt Rentals, Inc. v. Ehlers, No. 4-09-0290 (September 23, 2009) involved a non-compete agreement signed by Neil Ehlers, a former salesman of Sunbelt Rentals. After Ehlers resigned his employment and began working for a competitor, Sunbelt Rentals filed suit. The trial court granted a preliminary injunction, enforcing Ehlers' non-compete and keeping him from working for the competitor. Thereafter, he appealed.
The Background of Non-Compete law in Illinois
In order for non-compete agreements to be enforceable in Illinois, employers have historically had to show: (1) a legitimate business interest in need of protection, and (2) that the terms of the non-compete were reasonable as to their duration and geographic reach. Employers were able to establish a protectable interest if either their customer relationships were "near permanent," or if their employees acquired confidential information or trade secrets and thereafter attempted to use it for their own benefit.
The Sunbelt Rentals Decision
In affirming the trial court's decision, the Illinois Appellate Court for the Fourth District, which covers Springfield and parts of central Illinois, rejected over thirty years of precedent and abandoned the protectable interest requirement. Reasoning that other appellate districts had seemingly created the test "out of whole cloth" and that the Illinois Supreme Court had never expressly adopted it, the Court limited its analysis to the reasonableness of the non-compete's restrictions. It is the only Illinois appellate district maintaining this position.
What to Do
Although trial courts outside of the Fourth District are not bound by the decision, it has created uncertainty in a relatively settled area of the law. Until the Illinois Supreme Court addresses the question definitively, the case will raise new strategic considerations for employers in both enforcing and drafting their non-compete agreements.
If you would like more information about how this decision will affect your business, or have questions about your employment policies and practices in general, please contact Mr. Gonzalez at 312-558-9779 or at egonzalez@elvisgonzalezltd.com.
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