Does anyone know what does Illinois consider to be (sufficient consideration) for an existing employee’s non-compete agreement? For example, is a raise that is to be paid over the year enough? if the employee signed the non compete only 5 months ago is it valid? I am not a scientist so I hold no secret sauce or formula, Not in sales, I do not have a customer list. I spoke to two employment attorney they tell me it is not valid but how can I be sure I do not want to be sued. The length is 12 month
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Noncompete in Illinois
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adjusterjack
Senior Member
Quote the agreement word for word in its entirety (without any identifying information) and you'll get some helpful comments.
Also provide a better explanation of the circumstances surrounding the non-compete.
Also provide a better explanation of the circumstances surrounding the non-compete.
Below is the document. I work for the company for 3 years in total. I did not have a non-compete. In August 2018 they offered me a promotion but I had to sign the non compete. I was given a few days to sign and if I did not sign the non compete no promotion. I was terminated in January 2019. 6 month with non compete they want to enforce it.
This Confidentiality, Non-Solicitation, Non-Competition and Proprietary Information Agreement (the “Agreement”) is made between XXXXXXXXXXXXX and its affiliates (collectively the “Company”) and the employee identified below (the “Employee”). Throughout this Agreement, references to the “Company” are understood to include the Company, its subsidiaries, affiliates, business units, related companies, parent companies, successors and assigns, including but not limited to XXXXXXXXXXXXX LLC.
WHEREAS, Employee will learn and have access to the Company’s confidential, trade secret and proprietary information and key business relationships, understands that the products and services that the Company develops, provides and markets are unique and agrees that the promises in this Agreement are an important way for the Company to protect its proprietary interests;
WHEREAS, Employee acknowledges and agrees that he or she has been given an adequate period of time to consider this Agreement, to have this Agreement reviewed at Employee’s expense and by a legal advisor of Employee’s choice regarding the terms and legal effect of this Agreement, has read this Agreement and understands all of its terms and conditions, and is entering into this Agreement of Employee’s own free will without coercion from any source and has not and cannot rely on legal advice provided by the Company or any personnel of the Company; and
WHEREAS, these Recitals are important and material terms of this Agreement.
NOW THEREFORE, in exchange for my employment with the Company and in consideration of the salary, wages and other benefits received for my services during my employment, I (Employee) agree as follows:
Restrictive Covenants.
Non-Solicitation / Specific Restrictions.
Employee acknowledges and recognizes the value of the Company’s intellectual capital, customer relationships and goodwill and accordingly agrees as follows:
During Employee’s employment with the Company and for a period of two (2) years following the date Employee ceases to be employed by the Company for any reason (the “Restricted Period”), Employee will not, whether on Employee’s own behalf or on behalf of or in conjunction with any other person, company or entity whatsoever, directly or indirectly, solicit or assist in soliciting the “PART Category” (defined as any product of the Company or its affiliates, including without limitation friction, rotors and calipers) business of any customer or prospective customer:
with whom Employee had personal contact or dealings on behalf of the Company during the two year period preceding Employee’s termination of employment;
with whom employees reporting to Employee have had personal contact or dealings on behalf of the Company during the two years immediately preceding the Employee’s termination of employment;
for whom Employee had direct or indirect responsibility during the two years immediately preceding Employee’s termination of employment; or
about which Employee learned confidential information during Employee’s employment with the Company.
During the Restricted Period, Employee shall not, whether on Employee’s own behalf or on behalf of or in conjunction with any other person, company or entity whatsoever, directly or indirectly:
raid, solicit, or attempt to persuade any employee of the Company or any person who was an employee of the Company during the six (6) months preceding the termination of Employee’s employment with the Company to leave the employ of the Company; (ii) interfere with the performance by any such persons of their duties for the Company; or (iii) communicate with any such persons for the purposes described in items (i) and (ii) in this paragraph;
solicit or encourage to cease to work with the Company any contractor or consultant then under contract with the Company or its affiliates; or
utilize or reveal confidential contract or relationship terms with any vendor or client used by or served by the Company at any time during the two years preceding the termination of Employee’s employment or relationship with the Company.
Non-Competition / Specific Restrictions. Employee acknowledges and recognizes the value of the Company’s intellectual capital, customer relationships and goodwill and accordingly agrees as follows:
Employee shall not, without written consent signed by an officer of the Company, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time for a period of one (1) year following the date Employee ceases to be employed by the Company for any reason, perform Competing Activities on behalf of a Competitor, which relate to the PART Category. For purposes of this Agreement, “Competing Activities” are any activities or services that are the same or similar in function or purpose to those Employee performed for Company with regard to the PART Category business during the two year period preceding Employee’s termination of employment or that are otherwise likely to result in the use or disclosure of the Company’s Confidential Information. For purposes of this Agreement, “Competitor” means any person or entity that is engaged in or planning to be engaged in providing Competing Products or Services. “Competing Products or Services” means any products and/or services that are the same or similar in function or purpose to a product and/or service offered by the Company in the PART Category such that it would replace or compete with a product and/or service the Company in the PART Category, provides to its customers or plans to provide to its customers and as to which Employee had material involvement or about which Employee received Confidential Information during the last two years of his or her employment with the Company. Employee agrees and acknowledges that the PART Category is international in scope, and that this restriction shall encompass the entirety of the United States, Canada, Germany, Mexico, China and the country where employee was located while employed by Company.
Reasonableness of Restrictions; Covenant Not to Sue. Employee acknowledges that the temporal, activity, and geographic limitations of Sections 2(a) and (b) are reasonable in scope and narrowly constructed so as to protect only the Company’s legitimate protectable interests, and will not prohibit me from obtaining meaningful employment following my termination of employment with the Company. Further, the Employee waives any and all claims that Sections 2(a) or (b) are not enforceable as written and covenants not to sue or otherwise pursue a legal challenge to the enforceability of this Agreement.
This Confidentiality, Non-Solicitation, Non-Competition and Proprietary Information Agreement (the “Agreement”) is made between XXXXXXXXXXXXX and its affiliates (collectively the “Company”) and the employee identified below (the “Employee”). Throughout this Agreement, references to the “Company” are understood to include the Company, its subsidiaries, affiliates, business units, related companies, parent companies, successors and assigns, including but not limited to XXXXXXXXXXXXX LLC.
R E C I T A L S:
WHEREAS, the Company wishes to protect its confidential information, customer relationships, goodwill and other legitimate business interests; WHEREAS, Employee will learn and have access to the Company’s confidential, trade secret and proprietary information and key business relationships, understands that the products and services that the Company develops, provides and markets are unique and agrees that the promises in this Agreement are an important way for the Company to protect its proprietary interests;
WHEREAS, Employee acknowledges and agrees that he or she has been given an adequate period of time to consider this Agreement, to have this Agreement reviewed at Employee’s expense and by a legal advisor of Employee’s choice regarding the terms and legal effect of this Agreement, has read this Agreement and understands all of its terms and conditions, and is entering into this Agreement of Employee’s own free will without coercion from any source and has not and cannot rely on legal advice provided by the Company or any personnel of the Company; and
WHEREAS, these Recitals are important and material terms of this Agreement.
NOW THEREFORE, in exchange for my employment with the Company and in consideration of the salary, wages and other benefits received for my services during my employment, I (Employee) agree as follows:
Restrictive Covenants.
Non-Solicitation / Specific Restrictions.
Employee acknowledges and recognizes the value of the Company’s intellectual capital, customer relationships and goodwill and accordingly agrees as follows:
During Employee’s employment with the Company and for a period of two (2) years following the date Employee ceases to be employed by the Company for any reason (the “Restricted Period”), Employee will not, whether on Employee’s own behalf or on behalf of or in conjunction with any other person, company or entity whatsoever, directly or indirectly, solicit or assist in soliciting the “PART Category” (defined as any product of the Company or its affiliates, including without limitation friction, rotors and calipers) business of any customer or prospective customer:
with whom Employee had personal contact or dealings on behalf of the Company during the two year period preceding Employee’s termination of employment;
with whom employees reporting to Employee have had personal contact or dealings on behalf of the Company during the two years immediately preceding the Employee’s termination of employment;
for whom Employee had direct or indirect responsibility during the two years immediately preceding Employee’s termination of employment; or
about which Employee learned confidential information during Employee’s employment with the Company.
During the Restricted Period, Employee shall not, whether on Employee’s own behalf or on behalf of or in conjunction with any other person, company or entity whatsoever, directly or indirectly:
raid, solicit, or attempt to persuade any employee of the Company or any person who was an employee of the Company during the six (6) months preceding the termination of Employee’s employment with the Company to leave the employ of the Company; (ii) interfere with the performance by any such persons of their duties for the Company; or (iii) communicate with any such persons for the purposes described in items (i) and (ii) in this paragraph;
solicit or encourage to cease to work with the Company any contractor or consultant then under contract with the Company or its affiliates; or
utilize or reveal confidential contract or relationship terms with any vendor or client used by or served by the Company at any time during the two years preceding the termination of Employee’s employment or relationship with the Company.
Non-Competition / Specific Restrictions. Employee acknowledges and recognizes the value of the Company’s intellectual capital, customer relationships and goodwill and accordingly agrees as follows:
Employee shall not, without written consent signed by an officer of the Company, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time for a period of one (1) year following the date Employee ceases to be employed by the Company for any reason, perform Competing Activities on behalf of a Competitor, which relate to the PART Category. For purposes of this Agreement, “Competing Activities” are any activities or services that are the same or similar in function or purpose to those Employee performed for Company with regard to the PART Category business during the two year period preceding Employee’s termination of employment or that are otherwise likely to result in the use or disclosure of the Company’s Confidential Information. For purposes of this Agreement, “Competitor” means any person or entity that is engaged in or planning to be engaged in providing Competing Products or Services. “Competing Products or Services” means any products and/or services that are the same or similar in function or purpose to a product and/or service offered by the Company in the PART Category such that it would replace or compete with a product and/or service the Company in the PART Category, provides to its customers or plans to provide to its customers and as to which Employee had material involvement or about which Employee received Confidential Information during the last two years of his or her employment with the Company. Employee agrees and acknowledges that the PART Category is international in scope, and that this restriction shall encompass the entirety of the United States, Canada, Germany, Mexico, China and the country where employee was located while employed by Company.
Reasonableness of Restrictions; Covenant Not to Sue. Employee acknowledges that the temporal, activity, and geographic limitations of Sections 2(a) and (b) are reasonable in scope and narrowly constructed so as to protect only the Company’s legitimate protectable interests, and will not prohibit me from obtaining meaningful employment following my termination of employment with the Company. Further, the Employee waives any and all claims that Sections 2(a) or (b) are not enforceable as written and covenants not to sue or otherwise pursue a legal challenge to the enforceability of this Agreement.
adjusterjack
Senior Member
It would help to know what you did for the company and why the company believes that restricting you from doing it for anybody else would protect the company's interests.
Illinois will uphold a restrictive covenant if it contains a reasonable restraint and the agreement is supported by consideration. The Illinois Supreme Court provided a comprehensive explanation of the standard of reasonableness in Reliable Fire Equipment Co v. Arredondo (2011). The decision didn't explain what consideration involved.
In Lawrence & Allen Inc v. Cambridge Human Res. Group, Inc 1997 the court explained that, before addressing reasonableness the court must first address two other elements:
The court found that the non-compete was ancillary to the employment relationship.
The court also found that
And that consideration existed because the employee worked for more than 2 years after signing the non-compete.
In Brown and Brown Inc v. Mudron (2008) the court ruled that a non-compete was unenforceable because the employee's 7 month employment after signing was not sufficient consideration to support the non-compete.
Read the Reliable case and others to learn about the standard of reasonableness:
https://scholar.google.com/scholar_...re+equipment+co+v+arredondo&hl=en&as_sdt=4,14
The Lawrence decision:
https://scholar.google.com/scholar_...q=non-compete+consideration&hl=en&as_sdt=4,14
The Brown decision:
https://scholar.google.com/scholar_...q=non-compete+consideration&hl=en&as_sdt=4,14
Also note that in the ensuing years since Reliable, many case decisions have cited Reliable. You might want to read them, too.
https://scholar.google.com/scholar?cites=13197572390181609348&as_sdt=400005&sciodt=4,14&hl=en
My conclusion (for the 2 cents that it is worth) is that your 5 months employment after signing the non-compete was not sufficient consideration to support it. I also think that the international restriction is also unsupportable. The 1 year restriction is typically reasonable depending on the factors. However, if the non-compete is shot down due to lack of consideration, the other elements are irrelevant.
Understand, though, that being right doesn't prevent you from being sued and incurring significant defense costs.
You might want to have an attorney respond to your former employer's desire to enforce the non-compete. The cost of that assistance would be a fraction of what it would cost you to defend a lawsuit and could get your former employer to back off.
quincy
Senior Member
Analyzing contracts is considered the practice of law. No one on this forum can provide you with an analysis of your contract or its terms as this falls outside the scope of this forum.
You will need to find a lawyer licensed to practice in your jurisdiction who can read the contract over in its entirety, and go over with you the facts of your employment. and offer you a legal opinion based on this personal review.
I will tell you only that Illinois courts tend to not "blue pencil" or modify noncompete agreements, keeping the enforceable provisions and modifying or disposing of the unenforceable provisions. Instead, often the entire contract will be void if one provision in the contract is unenforceable as written (e.g., overly broad in scope or overly restrictive in time).
Again, review the contract with an attorney in your area. Good luck.
You will need to find a lawyer licensed to practice in your jurisdiction who can read the contract over in its entirety, and go over with you the facts of your employment. and offer you a legal opinion based on this personal review.
I will tell you only that Illinois courts tend to not "blue pencil" or modify noncompete agreements, keeping the enforceable provisions and modifying or disposing of the unenforceable provisions. Instead, often the entire contract will be void if one provision in the contract is unenforceable as written (e.g., overly broad in scope or overly restrictive in time).
Again, review the contract with an attorney in your area. Good luck.
Mass_Shyster
Senior Member
Anyone can sue anybody for anything. Prevailing is a different story
If you don’t tell amyone where you’re working, how would they find out?
Ask one of your lawyers what the risks are.
quincy
Senior Member
Many prospective employers will ask about an applicant's employment agreements (like NDAs and noncompetes) as violating the terms of these agreements can affect the new employer as well as the former employee.
It could be a mistake for an employee to not disclose to his prospective/new employer any contracts that continue to bind him to the old employer. And lying is rarely if ever a good idea.
Mass_Shyster
Senior Member
All true.
The reality of the situation is that many employers use non-competes as a threat that they will never follow through with. In order to sue someone for violating a non-compete, the former employer needs to find something to indicate the former employer is employed by a competitor. That is much easier said than done. In the one case that I was involved in, the former employee was an outside salesperson, and was seen by his former boss at a trade show representing the competitor. Former employer spent the equivalent of the former employees annual salary in litigation that resulted in nothing more than the former employee losing his job. HOWEVER, the new employer paid the legal fees for the employee.
If the employee had not been spotted at the competitor's booth, no litigation would have occurred. I find it unlikely (but always possible) that a former employer will hire an investigator to follow a former employee to see where he goes to work.
And remember, violating a non-compete is not a crime, it is a breach of contract. Parties are always free to breach a contact and face the consequences.
quincy
Senior Member
I do not think it smart to lie to a prospective employer even if the chance of the lie being discovered is small.
As to a violation of an NDA or noncompete agreement being criminal, it depends on what business interests an employer is protecting with the agreements and how the agreement has been breached.
Although apparently not an issue here, revealing/selling trade secrets (which can include customer lists and operating procedures) can result in a criminal action being taken against the employee. Search for the case of the Coke employees who tried to sell Coke secrets to Pepsi. Pepsi told Coke - and the geniuses behind the theft and plan to sell Coke secrets spent some quality time in federal prison.
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Mass_Shyster
Senior Member
I was not suggesting lying to the new employer. I was suggesting the old employer has little chance of discovering the violation and pursuing legal action.
quincy
Senior Member
Okay. But I don't agree that an old employer is unlikely to find out about a breach of the employee contract. Prospective employers regularly check with previous employers as part of the background check.
cbg
I'm a Northern Girl
I remember one bio-tech lab I worked for where the source of our funding insisted that every staff member, from the CEO to the kid who printed the shipping labels, sign a combined NDA and non-compete. We told employees who questioned this, because it was a very small industry, we would rigidly enforce the NDA part but we had no intention of enforcing the non-compete part. We had a no-rehire policy for complicated reasons that had to do with these very agreements but we told everyone, as long as you keep your mouth shut about exactly what we were doing, you can go work for anyone you want to. We had one high-level employee who refused to sign it, and we accidentally on purpose overlooked that she hadn't signed it.
I had a point when I started but I seem to have lost sight of it. I'll shut up now.
I had a point when I started but I seem to have lost sight of it. I'll shut up now.