When contemplating the use of a restrictive covenant agreement in Illinois, careful drafting is key.  This in particularly important when dealing with the issue of whether adequate consideration has been given to the employee to make the restrictive covenant agreement binding. 

 

In 2013, in Fifield v. Premier Dealer Services, the Illinois First District Appellate court held that two years of continued employment after execution the restrictive covenant (containing a non-compete and non-solicitation of clients clause) was required to find adequate consideration to support enforcing the restrictive covenant.   Since then, state courts have consistently held that absent two years of continued employment, something additional of value must be provided.  The federal courts in Illinois, in the Northern and Central Districts, on the other hand, have generally refused to follow the Fifield two year, and instead have reviewed the adequate consideration issue on a case-by-case.   The Illinois Supreme Court has been of no help, refusing to clarify the issue.

 

The takeaway for employers is to not be penny wise, and pound foolish.  Employer's routinely pay good money for signing bonuses to attract and hire valuable employees or pay fees to headhunters to find talent.   If you want to have a restrictive covenant immediately enforceable, and protect your company, provide something adequate and valuable to the new employee to ensure the restrictive covenant is enforceable.  This could be money, enhanced benefits, or other perks.  And make sure the additional adequate consideration, beyond employment, is spelled out in the restrictive covenant, and that the employee acknowledges that the consideration is adequate.

 

Call any Spognardi Baiocchi attorney if you need legal assistance in this area.                      

1. The non-exempt employee's hours fluctuate from week to week; 
2. The employer pays the employee a fixed salary each workweek, regardless of the number of hours worked by the employee. Remember employers must ensure that the employee is paid at least minimum wage for all actual hours worked; and
3. There is a "clear mutual understanding" between he employer and the employee that the fixed salary is compensation for all hours worked each workweek (apart from the overtime premiums).