Illinois employers are still reeling from the Illinois Supreme Court’s refusal to review the decision in Fifield v. Premier Dealer Services, Inc., No. 1-12-0327 (Ill. App. Ct., 1st Dist. June 24, 2013).  In Fifield, the First District Appellate Court ruled that employee non-competition and non-solicitation agreements supported by consideration consisting of less than two years of at-will employment are unenforceable, regardless of whether the employee resigned or was discharged, or the agreement was executed pre- or post-employment.  Moreover, employers are left wondering whether Fifield is the law of the land (of Lincoln) in the wake of Montel Aetnastak, Inc. v. Miessen, No. 13-cv-3801 (N.D. Ill. Jan. 28, 2014), which declined to follow Fifield, and held that fifteen months of employment was sufficient consideration to support a restrictive covenant agreement.  The Montel decision is also noteworthy given that the Court refused to enforce or blue-pencil the agreement due to the breadth of its geographic and activity restrictions, and the absence of a severability clause.

Companies around the country with Illinois employees should take action to ensure that any new and existing non-competition and non-solicitation agreements are enforceable in the wake of these game-changing decisions.  First, employers should contemplate offering additional forms of consideration for restrictive covenant agreements, such as salary increases, bonuses, severance, stock options (if available) and other incentives.  Second, where feasible and reasonable under the circumstances, employers should consider revising key restrictive covenant agreements to: include choice of law provisions applying a more favorable state law; evaluate the reasonableness of the duration, geographic, and activity restrictions; and confirm the inclusion of an effective severability clause.  Third, given that Fifield does not limit the enforceability of confidentiality and non-disclosure agreements, employers should revisit and strengthen such agreements so that they adequately protect any confidential or proprietary information.  Fourth, employers contemplating corporate transactions that impact employment status should explore arrangements that allow the length of service of an employee subject to a restrictive covenant agreement to remain intact for purposes of satisfying Fifield’s two-year requirement.  Taking these steps will help employers secure more enforceable restrictive covenant agreements in Illinois, which will better protect valuable employee talent and confidential information from competitors.

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Photo of Nigel F. Telman Nigel F. Telman

Nigel F. Telman is the Managing Partner of the Firm’s Chicago office, leads the Employment practice in the Chicago office, and is co-head of the Labor Department’s national Employment Litigation & Arbitration Practice Group.

Nigel serves as a high-level strategic advisor to his…

Nigel F. Telman is the Managing Partner of the Firm’s Chicago office, leads the Employment practice in the Chicago office, and is co-head of the Labor Department’s national Employment Litigation & Arbitration Practice Group.

Nigel serves as a high-level strategic advisor to his clients on “bet the company” employment-related claims that often involve significant reputational risk. The nation’s leading organizations turn to Nigel to handle their most sensitive and challenging matters which, due to his involvement, often successfully result in non-public and confidential resolutions. When matters are unable to be settled, Nigel works with clients to strategically design a litigation strategy that advantageously positions them for successful dispositive motions, trial and the possibility of post-trial appeals.

A strategic advisor to boards and C-suite executives on the full spectrum of the employer/employee relationship, Nigel’s nationwide practice is concentrated in litigating single and class action disputes arising out of claims of workplace harassment and employment discrimination, and in handling confidential workplace investigations. In addition, Nigel has significant experience defending and enforcing Restrictive Covenant Agreements, as well as protecting employers’ trade secrets and other confidential information from misappropriation by former employees through the institution of emergency litigation seeking temporary and permanent injunctive relief. Nigel utilizes his experience litigating employment-related disputes to counsel clients on effective ways to avoid litigation. His counseling practice focuses on training and advising clients on ways to improve all aspects of the employment relationship, including techniques on how to make effective hiring decisions; reviewing and revising employment policies, practices and procedures; and advising on employee disciplinary matters, reductions in force and termination decisions.

Providing the highest level of strategic advice and execution across all phases of the employee lifecycle from hire to exit, Nigel represents clients in a range of industries before state and federal courts throughout the country as well as before the U.S. Equal Employment Opportunity Commission, state and local administrative agencies, and the American Arbitration Association.

Nigel is ranked by Chambers USA in Illinois for Labor & Employment and his clients praise him as being “business-savvy and delivering stellar results. He is an extremely effective negotiator and has the highest degree of integrity in all of his dealings.”