Employee Non-Compete Agreement (IL)
Employee Non-Compete Agreement (IL) Preparation Form – We recommend that you gather the information in this form prior to accessing the online questionnaire. Doing so will help you efficiently create your custom Illinois Employee Non-Compete Agreement.
This Illinois Employee Non-Compete Agreement (also known as a non-compete agreement or non-compete) is intended for use by a company or other employer to limit certain competitive activities of an employee when the employment relationship ends. Employees or businesses located in Illinois should use this agreement because this agreement is based on Illinois law.
Illinois courts generally disfavor non-competes because they act as restrictive covenants and are adverse to public policy encouraging an open and competitive marketplace. Thus, employers seeking to bind employees to non-competes must consider the possible legal challenges to enforcement in drafting the agreements. The employer should carefully tailor a non-compete to account for the various issues that may affect enforceability, such as whether the non-compete:
- Is supported by adequate consideration.
- Identifies a legitimate business interest worthy of protection.
- Meets the standards for reasonableness under state law, including that it:
- is of a reasonable duration;
- defines prohibited competitive activity to include only activity necessary to protect the legitimate business interests identified;
- reasonably limited in geographic scope or business parameters;
- does not impose an undue hardship on the employee; and
- is not harmful to the public.
- Includes provisions that supplement the restrictions on unfair or unlawful competition with additional limitations restricting:
- the solicitation of the employer’s employees, customers, or clients; or
- the use or disclosure of confidential information.
Special Rules for Low-Wage Employees, Attorneys, the Broadcasting Industry, and State Contractors
- Low-Wage Employees. Illinois law prohibits employers from entering into a covenant not to compete with a low-wage employee. Therefore, any covenant not to compete entered into with a low-wage employee is void. For example, a low-wage employee is defined as an employee earning the greater of:
- The required federal, state, or local minimum wage.
- $13 per hour.
- Attorneys. A lawyer may not offer or make either:
- An employment agreement, partnership agreement, or similar agreement that restricts another’s lawyer ability to practice law after the relationship ends, unless the agreement is about retirement benefits.
- A settlement agreement restricting lawyers from practicing law.
- Broadcasting Industry. A broadcasting industry employment contract may not contain a post-employment non-compete provision. However, courts will enforce a non-compete provision if the:
- Provision covers only the contract term.
- Employee breached the employment contract.
- State Contractors. An employer may not offer to pay money or any other valuable thing:
- To induce an employee not to bid for a state contract.
- As payment for not having bid on a state contract.
- Sale of Business. Illinois courts apply a more lenient test and are more likely to enforce non-competes related to a sale of a business because the parties negotiate at arm’s length.
Limitations of Non-Competes
Finally, employers should understand what non-competes can and cannot accomplish. For example, non-competes can help protect against unfair or unlawful competition by former employees. However, non-competes cannot eliminate all forms of competitive activity.
Again, Illinois law disfavors non-compete agreements because they act as restrictive covenants and are adverse to public policy encouraging an open and competitive marketplace. Therefore, employers should take additional precautions to protect their valuable resources.
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Employee Non-Compete Agreement (IL)