Good Counsel Means Good Outcomes in Non-Compete Litigation

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Good Counsel Means Good Outcomes in Non-Compete Litigation

I’ve read McInnis v. OAG Motorcycle Ventures, Inc., several times since the 2015 decision was handed down by an Illinois appellate court. I reviewed it again recently while preparing for a conference, and was reminded of just how important it can be to work with experienced counsel if you’re planning on leaving a company that might attempt to constrain you with a non-compete agreement.

McInnis was the third in the trilogy of two-year rule cases (we covered Fifield before, and our firm worked on Prairie) that Illinois appellate courts have decided in the past few years. The simple analysis of McInnis is that an employee’s non-compete agreement is not enforceable if the employee has been employed in the job for less than two years after signing, unless the employer provides the employee with some benefit beyond the job itself (additional “consideration”).

But there is more to this case. The employee was a top-performing salesperson at a Harley-Davidson motorcycle dealership from August 2009 until October 2012. He then resigned for one day and went to work for a competitor, but decided he wanted to come back to the first dealership. His initial employer agreed to re-hire him as long as he signed a non-compete agreement. The employer waived a 90-day training period for new hires and that was required for being eligible to receive benefits. The employee signed the non-compete agreement on October 25, 2012.

The employee began negotiating a new contract with a competitor in November 2013. He received the competitor’s contract in March 2014, and was able to negotiate indemnification language so that his new employer would pay for his legal costs (except if he misappropriated confidential information). To receive his commissions from his current job, he waited until May 1, 2014 to resign. He then filed a lawsuit in Cook County, Illinois asking the court to declare that his non-compete agreement was not enforceable, and he started his new job on May 5, 2014. Because he worked for the employer for less than two years, the trial and appellate courts ruled that the agreement was unenforceable.

The key to this employee’s success in transitioning between jobs was his exit strategy. This case highlights the value of working with an experienced employment attorney for developing an exit plan ahead of time. The employee was able to (i) receive his commissions, (ii) limit his personal legal costs, and (iii) receive a lucrative new employment offer with a competitor. If you need to navigate the terms and conditions of your employment contract, and ensure you are taking action on the appropriate timeline with your current and a potential new job, reach out to experienced counsel that will protect both your employment interests and your finances.