A recent Illinois federal court decision has called into question the much begrudged holding from the Illinois Appellate Court for the First District, First Division, in Eric Fifield and Enterprise Financial Group, Inc. v. Premier Dealer Services, Inc., 373 Ill. Dec. 379, 993 N.E. 2d 938 (Ill. App. Ct. June 24, 2013).
Articles Discussing Restrictive Covenants In Illinois.
Noncompete News: Illinois Appellate Court Finds Restrictive Covenant Unenforceable; Continued Employment of at Least Two Years Required
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:
Illinois Appellate Court Finds Insufficient Consideration Where Employer Relied on Under Two Years Employment in Support of Noncompetition and Nonsolicitation Agreements
On June 24, 2013, the Illinois Appellate Court for the First District (encompassing Cook County and Chicago) decided Fifield v. Premier Dealer Services, Inc., Case No. 1-12-0327 (June 24, 2013). The court found that Premier Dealer Services’ (Premier) offer of at-will employment at the onset of the plaintiff’s employment constituted insufficient consideration to support nonsolicitation and noncompetition provisions contained in his employment contract, but it would have constituted adequate consideration if his employment had continued for two years.
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 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.