Two Years of Employment are Key for a Valid Non-Compete Clause

Recently, an Illinois Appellate Court provided a definitive opinion regarding non-compete agreements. The Court indicated that Illinois Law requires at least two years of employment for an enforceable non-compete or non-solicitation agreement. The Court’s opinion is an important step to provide clarity for businesses and employees.

In Fifield, a company required that an employee sign a new agreement to remain employed. Fifield v. Premier Dealer Servs., 2013 IL App (1st) 120327, ¶ 3. The agreement contained non-compete and non-solicitation provisions. Id. The agreement also indicated that the post-employment language would not apply if the company terminated the employee without cause during the first year of employment. Id. ¶ 4. Approximately three months later, the employee resigned and the company attempted to enforce the post-employment provisions. Id. ¶¶ 5-6.

The Appellate Court wrote that Illinois courts heavily review contracts that prevent an employee from seeking a new job. Id. ¶ 13. The Court found that the employee did not receive a sufficient benefit to enforce the provisions. “Illinois courts have repeatedly held that there must be at least two years or more of continued employment to constitute adequate consideration in support of a restrictive covenant. . . . This rule is maintained even if the employee resigns . . . instead of being terminated.” Id. ¶ 19 (citations omitted).

Fifield should provide additional clarity to the validity of post-employment restrictions. Another important aspect of the decision is its re-affirmation that even if an employee resigns, two years of continued employment are necessary to enforce restrictive clauses.