Non-Compete Agreements and Restrictive Covenants

Non-Compete Agreements and Restrictive Covenants

Restrictive language in employment agreements can often be confusing; non-competition clauses, restrictions on the use of confidential information, and non-solicitation clauses may seem quite similar. In general, the four types of restrictive covenants commonly seen in Illinois employment contracts are:

  • Restrictions on use of confidential information
  • Anti-raiding of employees
  • Non-solicitation of customers
  • Non-compete agreements/provisions

If an employee has a restriction in his or her employment agreement, the employer may be able to bring an action against the employee for breach of contract if he or she does not adhere to the restriction. Likewise, even if the employee never signed an employment agreement, the employer may have a remedy against the employee under a state statute (such as the Illinois Trade Secrets Act) or a common law claim for breach of fiduciary duty or misappropriation of trade secrets.

Restrictions on Use of Confidential Information

For the employee, this is the least onerous of the four types of restrictive covenants. These restrictions prohibit a former employee from “using” or “misappropriating” confidential information that the employee learned or to which the employee had access while employed.

Anti-Raiding of Employees

These provisions prohibit former employees from inducing other employees to leave the former employer or to form a competing business. The duration of the restriction may vary, but must be “reasonable” in order to be enforceable.

Non-Solicitation of Customers

Non-solicitation provisions prohibit former employees from inducing customers to stop doing business with the employee’s former employer and/or from going into business with the former employee. Such provisions typically prohibit contact with and solicitation of customers with whom the employee has dealt within the last six months (or a similar period of time) of the employee’s employment. Like anti-raiding provisions, the duration of the restriction may vary, but must be “reasonable” in order to be enforceable.

Non-Compete Agreements/Provisions

Non-compete agreements or provisions are the most onerous of the restrictive covenants for employees, because they may diminish the ability of a former employee to earn a living. These provisions prohibit former employees from engaging in a “competing business” with the former employer. How broadly or narrowly the term “competing business” is defined is essential, but the term generally means that the employee may not work for a competitor for a certain period of time. In order to be enforceable, non-compete provisions must be reasonable in scope, duration, and geographic limitations. The more specialized the former employer’s business, the more extensive a non-compete provision can be under the law.

Our Employment Law Services

Our attorneys regularly review restrictive covenants, and have successfully negotiated their terms and defended our clients against claims of breach. If you have questions regarding non-compete agreements or restrictive covenants, or if you would like an attorney to review your employment contract or other employment agreement, contact Siegel & Dolan to speak to a Chicago employment lawyer.

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