Trade Secrets & Employee Mobility

The Connecticut Supreme Court recently held that continued employment may constitute sufficient consideration for noncompete agreements under Connecticut law, but left unclear the parameters of that holding.

In Dur-A-Flex, Inc. v. Dy, Dur-A-Flex, a commercial flooring company, hired Samet Dy as a research chemist in 2004. Years later, in 2011, Dur-A-Flex required Dy to execute a noncompete agreement as a condition of continued employment. The noncompete agreement prohibited Dy from performing any services for a competitor for twenty-four months after his employment terminated. In 2013, Dy resigned and Dur-A-Flex sought to enforce the noncompete. The trial court held that the noncompete was unenforceable because continued employment can never constitute sufficient consideration for a noncompete agreement.

On appeal, the case was transferred from the appellate division to the Connecticut Supreme Court. In a July 2, 2024 decision, the Supreme Court reversed the trial court, which had relied on a 2014 court of appeals decision entitled Thoma v. Oxford Performance Materials, Inc., to hold that “a party giving nothing more than the status quo of continuing employment … offers no consideration [in] exchange for his promise and the promise is, therefore, unenforceable.” The Supreme Court agreed with Dur-A-Flex that Thoma was distinguishable and that a 1934 Connecticut Supreme Court decision called Roessler v. Burwell was controlling. The Court held that under Roessler, “a promise of indefinite, continued employment for an at-will employee in exchange for the employee’s promise not to compete constitutes adequate consideration to form an enforceable agreement.”

On January 1, 2022, amendments to the Illinois Freedom to Work Act, 820 ILCS 90/1, et seq. (the “Act”), became effective, trumpeting reforms and limitations on an employer’s ability to enter into covenants not to compete and covenants not to solicit with certain categories of employees whose actual or expected annualized rate of earnings fall below certain thresholds.

Now, just two short years later, the Illinois state legislature has introduced four different bills containing proposed amendments to the Act that would undermine, if not completely obliterate, the Act’s ...

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