Total Articles: 24
Fisher Phillips • April 30, 2018
Daniel Dumrauf was a Director with Medix Staffing Solutions, Inc., a Chicago-based staffing agency. Dumrauf worked at Medix’s Scottsdale, Arizona office. Dumrauf’s employment agreement contained a non-compete clause that restricted him from being connected in any manner “with the ownership, management, operation or control” of any business in competition with Medix, either directly or indirectly. The non-compete was to be effective for eighteen months and covered a 50-mile radius.
FordHarrison LLP • April 24, 2018
Executive Summary: When drafting restrictive covenants, employers face a common dilemma about the scope of activities to be restrained. On the one hand, highly focused non-compete language tends to be more enforceable but might not protect the company’s legitimate business interests. On the other, a one-size-fits-all blanket prohibition is more comprehensive but runs the risk it will be unreasonably broad and unenforceable. A recent decision by a federal court in Illinois, Medix Staffing Solutions, Inc. v. Dumrauf (N.D. Ill. Apr. 17, 2018), draws a bright line regarding when a non-compete clause is overbroad as a matter of law. Notably, the court rejected language used frequently in non-compete covenants throughout the country, finding the language so all-encompassing as to be entirely unreasonable.
Littler Mendelson, P.C. • December 07, 2017
While the emergence of biometric technology in the workplace is not a new phenomenon, employers being sued for utilizing this technology is a new trend. Over the past three months, more than 30 class action lawsuits have been filed in Illinois state and federal courts against employers that use timeclocks that scan an employee’s fingerprint, retina, or iris to clock employees into and out of work (“biometric timeclocks”).1 The lawsuits allege violations of Illinois’ Biometric Information Privacy Act (“BIPA”), which governs the collection, use, and disclosure of biometric data2 by entities in Illinois.
Fisher Phillips • October 31, 2017
Last week, the Attorney General of Illinois filed suit against Check Into Cash, LLC, alleging that the payday lender required its low-wage customer service employees to agree to illegal non-compete agreements in violation of Illinois law. The lawsuit is another example of the Attorney General’s fight against illegal non-competes and marks the first time the Attorney General has brought a claim under the Illinois Freedom to Work Act, 820 ILCS 90/1.
Jackson Lewis P.C. • August 26, 2016
Illinois has a new non-compete statute that bans the use of non-compete agreements with “low-wage” employees.
Ogletree Deakins • August 26, 2016
On August 19, 2016, Illinois Governor Bruce Rauner signed a bill prohibiting noncompete agreements for low-wage employees. In addition to prohibiting most private-sector employers from entering into noncompetes with its low-wage employees, the Illinois Freedom to Work Act (the Act) renders “illegal and void” any “covenant not to compete entered into between an employer and a low-wage employee” after the effective date of January 1, 2017.
Franczek Radelet P.C • June 13, 2016
On Wednesday, Illinois Attorney General Lisa Madigan filed suit against fast-food franchisor Jimmy John’s and several Jimmy John’s franchisees operating in Illinois claiming that Jimmy John’s and its franchises unlawfully require at-will, low-wage employees to sign non-compete agreements. The complaint asserts that at the time of hire, Jimmy John’s employees—including delivery drivers and sandwich makers—are required to sign non-compete agreements.
Jackson Lewis P.C. • March 18, 2016
The saga of “What consideration is adequate?” in Illinois continues. What has become clear is that federal courts are more forgiving than Illinois state courts on this issue.
Jackson Lewis P.C. • November 13, 2015
A recent decision from an Illinois Appellate Court suggests that employers with non-compete agreements “built to scare” may end up with an unenforceable contact and even the loss of confidential information under Illinois law. AssuredPartners, Inc. v. Schmitt (October 27, 2015 1st Dist.)
Ogletree Deakins • November 05, 2015
Just days before Halloween, the Illinois Appellate Court sent a scary message to employers: We will not enforce or judicially modify your overly broad restrictive covenants! In AssuredPartners, Inc. v. Schmitt, No. 13 CH 19264 (October 26, 2015), the Illinois Appellate Court affirmed a circuit court’s holding that an employer’s restrictive covenants were overbroad and unreasonable as a matter of law. Adding insult to injury, the appellate court also affirmed the court’s refusal to judicially modify the restrictive covenants, despite the parties’ agreement authorizing judicial modification. That decision left the employer holding a bag of rocks.
Jackson Lewis P.C. • July 22, 2015
Since the much-discussed Fifield case from the Illinois appellate court two years ago, all that could be said with confidence was that, unless someone was employed for at least two years after signing a restrictive covenant agreement, its enforceability was highly questionable. Practitioners in Illinois have been recommending that employers provide consideration in addition to employment, such as a “sign on” bonus tied to the restrictions or any other consideration that would not be given but for the individual’s agreement to the restrictions. In the next breath, practitioners have been telling their clients that even the additional consideration might not be enough to bind employees employed for less than two years. Uncertainty is everyone’s enemy in this area, and there has been great uncertainty for the past two years. But that uncertainty recently has been reduced by the same appellate court’s ruling in McInnis v. OAG Motorcycle Ventures, Inc. decided June 25, 2015 by the Illinois Appellate Court for the First District, albeit by a 3-judge panel different from the panel that decided Fifield.
Franczek Radelet P.C • February 17, 2015
On February 6, 2015, a federal judge in the Northern District of Illinois rejected the Illinois First District Appellate Court’s holding in Fifield v. Premier Dealer Services, the 2013 decision which held for the first time that an employee must work for at least two years after signing a restrictive covenant agreement for the continued employment to constitute adequate consideration. The decision raises the possibility that the Court of Appeals for the Seventh Circuit will review the issue, as three federal district judges now disagree over the viability of the “bright line rule.” While this decision provides a ray of hope for employers seeking to enforce non-competes in Illinois, Fifield remains binding precedent that will be applied by Illinois courts. Employers seeking definitive guidance on the consideration necessary to support a non-compete will need to wait until the Illinois Supreme Court issues a definitive ruling.
Ogletree Deakins • October 18, 2013
Continuing the saga of whether continued employment is sufficient consideration to support a restrictive covenant agreement, the Illinois Supreme Court, on September 25, refused to review Fifield v. Premier Dealer Services, Inc., No. 1-12-0327, 2013 IL App (1st) 120327 (Jun. 24, 2013)—a controversial Illinois Appellate Court decision on the enforceability of restrictive covenants. The Illinois Supreme Court’s decision means that Fifield’s mandate that two-years of continued employment is required for an employer to enforce a post-employment restrictive covenant is now binding precedent in a large part of Illinois.
Ogletree Deakins • October 16, 2013
The Illinois Supreme Court’s recent refusal to review the Illinois Appellate Court’s controversial decision in Fifield v. Premier Dealer Services, Inc., No. 1-12-0327, 2013 IL App (1st) 120327 (Jun. 24, 2013) leaves employers with uncertainty about the appropriate consideration to support employee restrictive covenant agreements at hire.
Vedder Price • October 14, 2013
In July 2013, we reported on the decision by the Illinois Appellate Court for the First District in Fifield v. Premier Dealer Servs., Inc., No. 1–12–0327, 2013 WL 3192931 (June 24, 2013). The Appellate Court ruled that there must be at least two years or more of continued employment to constitute adequate consideration in support of a restrictive covenant where no other consideration is provided. See id. at *4–5. The court’s ruling applies to all at-will employees, new or existing, who have not reached at least two years of continued employment after execution of a restrictive covenant agreement. This two-year threshold throws into question the enforceability of any restrictive covenant applicable to an at-will employee with less than two years of service whose agreement is governed by Illinois law.
Franczek Radelet P.C • October 14, 2013
In July 2013, we reported on the First District Appellate Court’s ruling in Fifield et al. v. Premier Dealer Services, Inc., in which the court upended Illinois law regarding what consideration is needed to create an enforceable post-employment non-compete agreement. Before Fifield, the conventional wisdom in Illinois was that, at least at the outset of employment, an employer need not offer an employee any additional consideration beyond at-will employment in exchange for a non-compete agreement. In Fifield, the Appellate Court rejected that reasoning, holding that at-will employment is valid consideration for a non-compete agreement only if the employee is actually employed for at least two years after signing the agreement. Under Fifield, if at-will employment is the only consideration offered in exchange for a non-compete agreement, the agreement will be rendered void if the employee’s employment ends for any reason before the two-year mark. (A full summary of the decision is available in our July 2013 alert.)
FordHarrison LLP • July 24, 2013
In a decision handed down June 24, 2013, the Illinois Appellate Court, First District, found a restrictive covenant unenforceable due to lack of adequate consideration. Although this is not the first time an Illinois court has held that there must be at least two years of continued employment to constitute adequate consideration to support a restrictive covenant, the ruling in this case was remarkable because:
Vedder Price • July 18, 2013
The Illinois Appellate Court for the First District has ruled that the commencement of at-will employment is not adequate consideration to support the enforcement of post employment restrictive covenants.
Ogletree Deakins • July 16, 2013
The Illinois Appellate Court’s recent opinion in Fifield v. Premier Dealer Services, Inc. takes an aggressive stance on continued employment as consideration to support enforcement of a non-competition or non-solicitation agreement.
Franczek Radelet P.C • July 09, 2013
In Illinois, it has long been recognized that a restrictive covenant in employment is enforceable so long as the employee engages in "substantial continued employment" after the employee signs the agreement. Illinois courts typically have found sufficient consideration supporting an agreement when an employee worked for more than two years, and conversely have rejected agreements where the employee worked for the employer for just a few months. The courts, however, have not established a bright-line rule. Until now.
Franczek Radelet P.C • December 12, 2011
A decision issued last week by the Illinois Supreme Court clarified the requirements in Illinois for enforceable post-employment restrictive covenants. In Reliable Fire Equipment Co. v. Arrendondo, the Court reaffirmed the longstanding requirement that a â€œlegitimate business interestâ€ is, in fact, a necessary element in determining the enforceability of a post-employment covenant not-to-compete. At the same time the Court rejected the view prevailing for many years among the lower Illinois courts that the only means to establish a legitimate business interest was for an employer to demonstrate either a near-permanent customer relationship or the existence of confidential and/or trade secret information. Under the Reliable Fire decision, courts must now look to the â€œtotality of circumstancesâ€ to determine whether a non-compete restriction is justified by a legitimate business interest and otherwise is enforceable.
Ogletree Deakins • December 06, 2011
On December 1, 2011, the Illinois Supreme Court issued a unanimous opinion in Reliable Fire Equipment Company v. Arredondo, No. 111871, 2011 WL 6000743 (Dec. 1, 2011) holding that courts cannot use rigid, structured tests to determine whether restrictive covenants are enforceable. Specifically, the Illinois Supreme Court held that while courts must continue to evaluate whether an employer has a legitimate business interest that justifies the use of a restrictive covenant, courts should not use isolated, inflexible factors in making this assessment.
Fisher Phillips • December 05, 2011
The Illinois Supreme Court recently brought Illinois into the mainstream of non-compete agreements. Like a majority of states across the country, Illinois courts must now determine whether an employer has a legitimate business interest that warrants the imposition of a restrictive covenant, whether the covenant presents an undue burden, and whether it is contrary to the public interest. In short, Illinois courts must determine whether a restrictive covenant is reasonable under the circumstances.
Fisher Phillips • March 19, 2010
A landmark decision was recently issued by the Fourth District appellate court in Springfield making restrictive covenants substantially easier to enforce in central Illinois. As a result, businesses in central Illinois will have greater control over the activities of departing employees.