A Sea Change in the Illinois Restrictive Covenant Agreement Framework

As we previously discussed in our blog post, the “continued employment doctrine,” which is the majority view in Illinois, is that two years of continued employment after an employee enters a restrictive covenant is “substantial continued employment” that makes the agreement enforceable without any additional consideration (such as payment, promotion, or other benefits). Under this view, continued employment lasting less than two years does not necessarily defeat consideration, but presents a tougher battle for enforcement.

But Illinois state courts have previously only applied the continued employment doctrine to agreements entered into between employees and employers after the employment relationship begins. We are not aware of any Illinois state court decisions applying the continued employment doctrine to agreements between employers and employees that are entered into prior to or at the commencement of the employment relationship, that is until now.

The Illinois Appellate Court’s recent opinion in Fifield v. Premier Dealer Services, Inc. presents a sea change: if employment is the sole consideration for a restrictive covenant agreement (including prior to or at the commencement of the employment relationship), the consideration will not be valid until the employee is employed for at least two years. Employers should be proactive in light of this decision. For more on the Fifield case and the steps employers should take in response to the case, see “A Sea Change—Illinois Appellate Court Issues Key Ruling on Restrictive Covenant Agreements.”

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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