Noncompete agreements have always been controversial for the way they intend to or unintentionally restrict employees from gaining employment after leaving a job where a noncompete agreement was signed. In 2017, the Illinois General Assembly addressed concerns about noncompete clauses found in low-wage employees. Effective January 2017, the Illinois Right to Work Act prohibits private-sector employers from entering into noncompete agreements with low-wage employees, rendering such agreements facially illegal and void.
This Illinois law is similar to other states that have passed legislation that also limits the employer’s ability to restrict low-wage employees in noncompete contracts in the private-sector.
For example, in the last couple of years, Alabama, Hawaii, New Mexico, Nevada, Oregon, Utah and Washington have passed laws that restrict the enforceability of noncompete agreements. Other states, including New Jersey and Pennsylvania, have proposed legislation that mirrors restrictions in enforceability of noncompete agreements.
The basic reason behind this legislation is the concern that broad-based noncompete agreements have a negative impact on a worker’s ability to gain new employment and thus would impact the economy generally.
Noncompete agreements can be and are enforceable when they are narrowly constructed so that trade secrets, developing patents and customer lists sensitive to the company, are sought to be protected.
However, the signing by employees of broad-based noncompete agreements are ill-advised because of state law that prohibits such agreements. They are often found to be unenforceable because of that general restriction.
As a result, employers are advised to tailor noncompete covenants to restrict unfair competition and should be narrowly drafted in geography, time and scope.
Kreisman Law Offices has been handling business litigation, contract disputes, employment litigation and catastrophic injury lawsuits for individuals, families and businesses for more than 40 years in and around Chicago, Cook County and its surrounding areas, including Winfield, Westchester, Hickory Hills, Bedford Park, Blue Island, South Holland, Calumet City, Oak Forest, Chicago (Lakeview, Lakewood Balmoral, Loyola Park, Lincoln Square, Rogers Park, Roseland, Sauganash, Sheffield, Wrigleyville, Jackson Park Highlands, Hyde Park, Greek Town, Gold Coast, Edison Park), Joliet, Elgin, Round Lake Beach, St. Charles and Lisle, Ill.
Related blog posts:
U.S. Court of Appeals Ruled that Previous Business Owner Did Not Violate Non-compete Agreement
Illinois Freedom to Work Act Makes Some Noncompete Contracts Illegal
Illinois Appellate Court Affirms Judgment Against Alter Ego Parties