Chicago Non-Compete Agreements Lawyer
There are many aspects to handling non-compete agreements. Below are discussions on not only the legal standards for non-compete agreements, but negotiating with former employers or employees to enable the employee to take a new job, as well as the various kinds of legal actions which can take place.
Companies have often invested a great deal of money in building a client base or perfecting processes or inventions. These things need to be kept confidential in order to survive in the business world. Employees in sales or manufacturing are often exposed to important secrets including customer lists or trade secrets. Companies understandably want to protect this information. The result is a non-compete agreement.
A great example is the hair salon. The salon puts a great deal of money into advertising. Customers tend to stay with a hairstylist they like and, in this manner, the salon builds its client base. However, if the hairstylist leaves and begins working across the street, the investment in advertising will be lost to the salon as the clients go with the hairstylist who is so easily accessible. But this does not mean that the hairstylist who leaves should not be allowed to work as a hairstylist.
Valid V. Invalid Non-Compete Agreements
Non-compete agreements are treated differently from regular contracts. Unlike most contracts for employment, the non-compete agreement has the effect of inhibiting commerce. Public policy favors people having jobs and being productive. As a result, a non-compete agreement has to be properly limited geographically and temporally (length of time of the non-compete), limited by industry, and limited to a legitimate interest of the company.
A non-compete agreement which prohibits someone from working anywhere in the world is far less likely to be valid than one which prohibits someone from working within 10 miles of the former employer’s business. However, this will depend on the kind of work involved. The salon described above may have an interest in keeping the stylist from competing across the street but if the non-compete agreement prohibits the stylist from competing anywhere in the state, it becomes less reasonable. If the hairstylist can find a job in the state 50 miles away, most of the clients will not travel that distance for the service, but will stay with the salon. On the other hand, this non-compete could force the hairstylist to move to look for work or otherwise to travel hundreds of miles.
A non-compete must also be for a limited time. If the hairstylist is gone for a year, the salon can expect that the vast majority of the customers will have found other stylists at the salon or elsewhere and the hairstylist will likely do little harm to the business. Thus, keeping the hairstylist out of work for three years does little to help the business, but seriously harms the hairstylist.
In the end, to be valid a non-compete agreement must be narrowly tailored to meet the needs of the employer which will be balanced against those of the employee. If you are preparing a non-compete agreement, you need an experienced lawyer to draft it in a way that it will not be held invalid. If you are dealing with a non-compete agreement as an employee, there are lots of ways to counter it.
Problems From Non-Compete Agreements
There are several different ways that non-compete agreements can impact the parties once an employee leaves a business. If the employee finds another job, the former employer may have a claim or file a case against the employee to make him or her quit the new job. If the new employer asks to see an old non-compete agreement it may refuse to employ the individual and, thus, an individual can have a great deal of difficulty finding work. There are three basic things that employment lawyers (specifically non-compete lawyers) face in these circumstances. The first is to negotiate with the former employer or employee. Another is if the former employer files a case against a former employee who is violating a non-compete agreement. The third is where the former employee files a case against the employer to have the non-compete agreement declared invalid by a court. The last is called a declaratory judgment action.
The first step we take in addressing a dispute between a former employee and a former employer is to attempt to negotiate a compromise. What is it that the former employer really needs to protect? Is the employee really looking for work that will hurt the former employer? Can the work that the employee is taking be limited within the new company so as to satisfy the employer? As non-compete lawyers, we try to create an agreement that saves both parties the cost and trouble of a court battle. More often, an accommodation can be made so long as the employer and employee are being reasonable.
If an employee takes a position which the former employer believes is in violation of the non-compete agreement, it may sue the employee seeking a court order to prevent the employee from working. The former employer has a heavy burden in such cases. First, it is going to have to show that the employee has in fact taken or threatened to take an action in violation of the non-compete agreement. It is then going to have to prove to the court that the non-compete agreement is valid – that it is for a valid purpose and limited in time and geography. At the same time, to keep his or her job, the employee must defend the case.
The other possibility is that the employee is unable to find a job. In this situation, the employee may file a case asking a court to declare the non-compete agreement to be invalid. As previously discussed, the law heavily favors the employee. If the court enters a “declaratory judgment” finding the non-compete agreement to be invalid, it may either change the non-compete agreement or eliminate it altogether.
In any of these situations you need a Chicago non-compete lawyer. The lawyers at Maduff & Maduff, have handled all of these situations. If you are facing a non-compete agreement or need one call us in approximately one month.