Trade Secrets & Employee Mobility

A recent decision by one district of the Illinois Court of Appeals (Fifield v. Premier Dealer Services) significantly altered long-settled understandings regarding the consideration required for an enforceable restrictive covenant in Illinois. In light of that decision, Illinois employers hoping to enforce restrictive covenants within two years after the signing date should be prepared to distinguish Fifield factually or legally. Employers that are concerned about their ability to do so, or that want to err on the side of caution, should act now to address the implications of Fifield.

The Illinois Supreme Court recently announced that it was not going to review an Illinois Appellate Court decision, Fifield v. Premier Dealer Services, Inc., which held that, absent other consideration, two years of employment is required for a restrictive covenant to be deemed supported by adequate consideration - even where the employee signed the restrictive covenant as a condition to his employment offer - and even where the employee voluntarily resigned.

As the enforcement of non-competition agreements becomes more crucial than ever, some employers are including provisions that require or promise payments to the former employees during the post-employment period of non-competition. If properly crafted, such a payment may act as the additional consideration needed for the promise not to compete and may dissipate the former employee's argument of undue hardship during the non-competition period. Employers promising to make such payments must be prepared to follow through with their promises, as the Eighth Circuit recently held.