Restrictive covenants will continue to be enforceable in Illinois only when the employee is employed for at least two continuous years, after the Illinois Supreme Court declined to review a case challenging this standard.
In Fifield v. Premier Dealer Servs., 2013 IL App. (1st) 120327 (Ill. App. Ct. 1st Dist. 2013), appeal denied 2013 Ill. LEXIS 883 (Ill. Sept. 25, 2013), Premier Dealer Services, Inc. (Premier) employee Eric D. Fifield (Fifield) signed an employment agreement that contained nonsolicitation and noncompetition provisions. In particular, the agreement prevented the employee for a period of two years from the termination of employment from providing products or services in competition with Premier within the US and from soliciting, interfering or accepting business from Premier's customers. A few months after he began working for Premier, Fifield resigned and began working for one of its competitors, Enterprise Financial Group (EFG).
Fifield, EFG and Premier each filed actions regarding the enforceability of the nonsolicitation and noncompetition provisions. The trial court held that the restrictive covenants were not enforceable because they lacked adequate consideration - meaning that what Fifield was given (employment) was not equal in value to what he gave (promising to abide by the noncompete and nonsolicitation provisions).
Premier appealed the decision, arguing that Fifield's employment was adequate consideration in exchange for the nonsolicitation and noncompetition provisions. The appellate court rejected Premier's arguments and held that there must be at least two years or more of continued employment to establish adequate consideration in support of a restrictive covenant. Since Fifield resigned after only being employed for a little longer than three months, the appellate court determined that "[t]his period of time is far short of the two years required for adequate consideration under Illinois law." The appeals court held that this rule applies regardless of whether an employee resigns or is terminated.
Since the Illinois Supreme Court declined to review this decision, Illinois employers must ensure that their employees have received adequate consideration prior to seeking enforcement of the restrictive covenant. Otherwise, as seen in Fifield, the restrictive covenant may not be enforceable leaving an employer vulnerable to its competition.