Illinois Non-Compete Agreements – Additional Compensation Required

In Illinois, many companies have relied on the offer of employment or continued employment as “consideration” or adequate payment for an employee’s promise not to work for a competitor (a “non-compete” or “restrictive covenant”). In Fifield v. Premier Dealer Services, Inc. the Illinois Appellate Court recently held:

“there must be at least two years or more of continued employment to constitute adequate consideration in support of the restrictive covenant . . . .This rule is maintained even if the employee resigns on his own instead of being terminated.”

If you’re an Illinois employer who typically uses non-competes or restrictive covenants with employees, it is time to review your Illinois non-compete agreements to make sure they are enforceable. If there is no additional compensation or benefits provided to employees when they sign the agreement, it will now be unenforceable until the employee receives two years of compensation after signing an Illinois non-compete agreement.