Proposed Non-Compete Agreement Act of Illinois

State laws all vary as to whether employees are by default at will employment, by agreement, or another variation of the two.  In all states, employees could be contracted to do work.  Generally, the higher level the employee the more likely that the employer will include a “non-compete agreement” as part of the employee contract.

A non-compete agreement can be a part of a contract or its own separate contract.  This agreement creates terms on which if the employee is discharged—either voluntarily or involuntarily—the employee would have to follow such rules.  Usually this can mean that the employee cannot work within the same industry as the employer for a certain number of years, work for a competitor, take trade secrets or skills to use at a new employer, cannot work within the same vicinity, or cannot take clients or customers with him or her when they leave.

Courts have carefully scrutinized non-compete agreements and this is a major area of law which is contested often in employment and contract law.  For instance, attorneys say Illinois courts typically uphold reasonable restrictions to an employee’s post-employment.

States have handled this issue differently.  Illinois already has non-compete agreement laws on the books, however, Representative Thomas Morrison of the Illinois General Assembly introduced a new bill that some are calling very controversial.

The bill, HB 2782, is entitled the “Employment Noncompete Agreement Act.”  Instead of amending the current non-compete agreement law in Illinois, this law will be a separate entry.  Last year the same bill was presented but failed to be enacted.

There are two main controversial provisions of this law that will need to appease the committee before moving on to the Senate.  The first provision is in Section 5 of the bill where it declares “all employers have vested, protectable interests in” their business and customers.  The current state of the law already establishes such notion and last when the bill was proposed, this was a major source of contention.

The second provision that appears to be a sticky point  is the sliding scale of permissible post-employment covenants not to compete based on the salary of the employee which, would in turn, dictate the permissible length of time for a covenant. This is provided for in Section 15(a), and provides for the following:

• – Section 15(a)(3)(A) – if the salary is less than $50,000, the maximum period is 6 months;
• – Section 15(a)(3)(B) – if the salary is at least $50,000, but less than $100,000, the maximum period is 7 months;
• – Section 15(a)(3)(C) – if the salary is at least $100,000 but less than $150,000, the maximum period is 12 months; and
• – Section 15(a)(3)(D) – if the salary is over $150,000, the maximum period is 18 months.

What makes this provision so controversial for some lawmakers is that courts already have the power to determine what is “reasonable.”  This means that courts have a flexible standard they can apply which can change on a case by case basis, change with the times much quicker at the demands of the populace than if it were to be by legislative effect, and can take unpredictable factors into consideration that may arise in a case which a legislature just simply cannot do.

If you or your firm has concerns related to employment termination and non-compete agreements, particularly involving electronic records, please contact us today for more information.  As experienced computer forensic specialists, we have the resources and knowledge to efficiently answer your questions.  Here at Forensicon, we have been dedicated to this goal and served our clients zealously for more than a decade.  If you would like to learn more, visit our website and blotter.