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In a decision handed down June 24, 2013, the Illinois Appellate Court, First District, found a restrictive covenant unenforceable due to lack of adequate consideration. Although this is not the first time an Illinois court has held that there must be at least two years of continued employment to constitute adequate consideration to support a restrictive covenant, the ruling in this case was remarkable because:
This important decision, Fifield v. Premier Dealer Services, Inc., brings into sharp focus the hurdles an Illinois employer will face when attempting to enforce a restrictive covenant. The decision illustrates that if the only consideration provided by the employer is employment (either a new job offer or continued employment), then Illinois courts will not enforce the restrictive covenant until at least two years' continuous employment have transpired.
Illinois employers are well-advised to confer with employment counsel when drafting and implementing restrictive covenant agreements with employees to ensure that adequate consideration is provided. Some alternative approaches may be:
Topics: Consideration, Contract Drafting, Restrictive Covenants
Published In: General Business Updates, Labor & Employment Updates
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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