Total Articles: 10
Illinois Appellate Court Applies Reliable Fire Retroactively to Reverse and Remand Hair Salon Restrictive Covenant Case
In Reliable Fire Equipment Company v. Arrendondo [pdf], discussed here, the Supreme Court of Illinois dramatically altered how protectable legitimate business interests in noncompetition agreements were to be reviewed under Illinois law, clarifying what it felt were decades of misapplication. On February 3, 2012, the first decision was issued applying Reliable Fire in a retroactive fashion, resulting in an Illinois appellate court reversing and remanding a lower court decision denying enforcement of a noncompetition agreement.
Illinois Supreme Court Clarifies Employer’s Burden in Enforcing Post-Employment Covenants Not-to-Compete
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 “legitimate business interest†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 “totality of circumstances†to determine whether a non-compete restriction is justified by a legitimate business interest and otherwise is enforceable.
IL Supreme Ct's Decision in Reliable Fire Broadens Enforceability of Restrictive Covenants
Many clients who deal regularly with employee restrictive covenants have eagerly awaited the Illinois Supreme Court’s decision in Reliable Fire Equipment Co. v. Arredondo et al. The court was faced with answering the question of whether employers seeking to enforce restrictive covenants must show a legitimate business interest—in, for example, customer relationships and/or confidential information—in addition to demonstrating the reasonableness of the time, territory and activity restraints. There has been disagreement recently among the Illinois appellate courts as to whether a protectable interest need be shown at all, a position which, if adopted by the supreme court, would significantly alter how restrictive covenants are written and enforced in Illinois.
Illinois Supreme Court Expands Scope of Covenants Not to Compete
On December 1, 2011, the Supreme Court of Illinois issued its opinion in Reliable Fire Equipment Company v. Arrendondo, Case No. 2011 IL 111871, addressing and clarifying several issues relating to the enforceability of noncompetition agreements in Illinois and setting forth a standard that may result in employers facing a lighter burden to enforce such agreements against former employees.
Illinois Supreme Court Resolves Split in Appellate Courts and Rejects Use of Rigid Tests to Evaluate Restrictive Covenants
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.
Illinois Joins the Mainstream With Respect to Non-Competes
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.
Recent IL Case - Important Distinctions Between Restrictive Covenants in the Sale-of-Business
Recent Illinois Case Highlights Important Distinctions Between Restrictive Covenants in the Sale-of-Business and Employment Contexts
Ruling Gives Companies a Little More Protection.
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.
Restrictive Covenant/Trade Secrets Bulletin - Legislative Changes On The Horizon (pdf).
Covenants not to compete and the Illinois Trade Secrets Act are powerful weapons that an employer can
use to prevent unfair competition by a former employee. Two bills recently introduced to the Illinois legislature
propose changes that, if enacted, could signifi cantly alter the law in these two areas.
Physician Restrictive Covenants Upheld by the Illinois Supreme Court (pdf).
The Illinois Supreme Court affirms the enforcement of a restrictive covenants in a physician's contract.
