Non-Compete Agreements

November 30, 2009

Non-Compete Agreements, or Restrictive Covenants, can prevent employees who leave their job from taking a different job with a competing company, from working within a certain geographic area, or from working in a given industry.  Some employers will require their employees to sign these types of agreements to protect their investment in those employees, or to protect the employer’s relationship with their customers.  These agreements can be found in some of the forms that you fill out when you are hired, in the Company Handbook, or may be presented for signature along with a promotion.  Typically, non-compete agreements are not favored by courts, and are analyzed in a variety of ways to determine if they can be enforced.  However, a recent Fourth District Appellate Court decision could make many more of these agreements enforceable and would have extensive ramifications on those employees that have signed an agreement not to compete.

Traditionally, any non-compete agreement has been analyzed under a two tiered approach, by looking first at whether the agreement is reasonable in its terms and secondly whether it serves a “legitimate business interest”.

This last September, in Sunbelt Rentals, Inc. v Ehlers, the Fourth District held that the Illinois Supreme Court has never adopted the “legitimate business interest” prong, and therefore the Courts should only look to the terms of the agreement to determine if the agreement is reasonable and should be upheld.  In ignoring the body of case law from other Illinois Appellate Courts, the Fourth District examined the Illinois Supreme Court opinions regarding non-compete agreements and found that they have never discussed the “legitimate business interest” test.  By ignoring this test, the Appellate Court proclaimed that so long as the terms of a contract are reasonable and do not violate the law, the Courts should not interfere with two parties right to enter into such contracts.

Since the case settled shortly after the decision, it has not been appealed.  Only time will tell how it will affect other Courts in analyzing non-compete agreements and the “legitimate business test” in the future.  If you are asked to sign a non-compete agreement, or if you are an employee looking to determine if an agreement that you signed with your employer can prevent you from finding another job in your industry, contact Jensen Law Office, LLC to meet with an attorney to discuss the circumstances surrounding your non-compete agreement.


Employment Contracts

September 8, 2009

Employment in Illinois is considered “at-will,” which generally means that either the employer or the employee may terminate the employment relationship at any time, without any warning, for any reason or no reason at all, as long as the employer’s action is not prohibited by state or federal law.  The state and federal laws prohibiting the termination of an employment relationship include laws prohibiting discrimination based on the employee’s membership in a protected class, or prohibiting retaliation for the employee’s engagement in protected activity.

Additionally, the employer and employee may enter into a binding contract to better define the terms of their relationship, and neither the employer nor the employee can end that contractual relationship outside of the methods discussed in the employment contract.  Most commonly, Unions will enter into contracts on behalf of employees to provide protection for the employee’s working conditions.  Contracts typically require an ending point or termination date, but may have automatic renewal provisions.  Typically employment contracts define the terms and conditions of employment, like: pay rate, hours, duties, benefits, job procedures to be followed, termination requirements, grievance procedures, non-competition agreement, overtime requirements, confidentiality, and many more.  If either the employer or the employee breaks the contract, the other party may be entitled to damages and may end up enforcing the contract in Court.

Should you have questions regarding the existence of an employment contract at your workplace, if you need clarification of the terms in your employment contract, if believe that your employer has violated the terms of your employment contract, or you would like assistance negotiating your employment contract, contact Jensen Law Office, LLC to speak to one of our attorneys.