Tag: Employment Law

Will 2 Years of Continued Employment Be Enough in Illinois to Enforce a Non-Compete?

The Answer: It’s Complicated.

In 2013, an Illinois Appellate Court in Fifield v. Premier Dealer Services, Inc., decided that absent additional consideration, continued employment for less than 2 years after the restrictive covenant was signed, would not be sufficient to enforce a restrictive covenant. The Fifield decision was unusual because courts often do not consider the adequacy of the consideration ̶ only that there was consideration to support a contract. Often, the promise of continued employment was acceptable. This decision sent shock waves throughout Illinois and required employers to reevaluate the value they were giving employees when entering into restrictive covenants.

Since that decision, Illinois state courts have routinely followed Fifield and applied its bright line test in cases where there is no additional consideration given to the employee except continued employment.

For example:

• October 31, 2017 – Employee signed a restrictive covenant after working for his employer for nearly 12 years and also served on the company’s board of directors. He announced his resignation and left 6 months later. He was finally removed from the Board a year after signing the restrictive covenant. Upon leaving he started a new business that directly competed with his employer. The Court found that the restrictive covenant was not enforceable because he did not work for at least two years after signing the restrictive covenant.
• June 25, 2015 – Employee worked for employer for more than three years and left. After working for the new employer for one day, the employee asked to come back. As a condition of his return, the employer requested he sign a restrictive covenant. The employee quit 18-months later. The Court held that because he did not work at least two years after executing the restrictive there was not sufficient consideration to support the restrictive covenants.

Complicating matters, however, Federal Courts in Illinois have consistently rejected Fifield’s bright line test and adhered to a more comprehensive fact specific analysis. The Federal Court’s decisions believe that the Illinois Supreme Court would not adopt Fifield’s rigid and bright line test and continue to a support a “totality of the circumstances” review. As a result, it has led to decisions that are at odds with the State courts:

For example:

• October 20, 2017 – Employees left after 13-months of employment, took confidential information, and started working for a competitor. Employees argued that Fifield governed and therefore the restrictive covenants were not enforceable. The Court disagreed and rejected Fifield’s bright line test.

• July 24, 2017 – Employee left after working for employer for nearly ten years. He signed a restrictive covenant 16 months prior to leaving. The Court rejected Fifield’s bright line rule. The Court noted that “[f]ive federal courts in the Northern District of Illinois and one federal court in the Central District of Illinois have predicted that the Illinois Supreme Court will reject the Illinois appellate court’s bright-line rule in favor of a more fact-specific approach.”

What does this mean for employers?

Because all Illinois employers should expect that they will have to enforce these agreements in a state court, the Fifield holding must continue to be respected. Employers should review their restrictive covenants to ensure the agreements are carefully drafted to improve enforceability.

Levin Ginsburg has been working with employers for approximately 40 years to help them protect their businesses. If you have any employment or other business related issues, please contact us at 312-368-0100 or email Walker Lawrence at wlawrence@lgattorneys.com

Employer’s Abuse of Discretion When Denying Employee’s Purely Discretionary Bonus

In McCleary v. Wells Fargo Securities, LLC, the Illinois Appellate Court for the First District held that a former employee sufficiently stated a claim for an unpaid bonus under a written bonus plan that expressly stated that bonuses were made at the sole discretion of the plan administrator, that bonuses were not guaranteed, and that bonuses could be awarded or denied for any reason.

The bonus plan provided that former employees who were discharged for non-performance reasons, had worked at least three months during the bonus period and met their performance objectives, would remain eligible to receive pro-rated bonuses. Although the bonus plan could be amended or terminated at any time pursuant to its terms, the bonus plan also stated that no amendment to the bonus plan would adversely affect bonuses earned prior to the effective date of the amendment.

The former employee had worked for more than three months of the bonus plan year and alleged that he met his performance goals before his discharge. The company exercised its discretion not to pay bonuses to any former employees who had not worked at least six months during the plan year.

The Appellate Court held that the former employee had alleged sufficient facts to state claims under the Illinois Wage Payment and Collection Act, and for breach of contract and unjust enrichment, because he had a reasonable expectation to receive a bonus and the company had abused its contractual discretion by increasing the bonus eligibility requirement from three months to six months of employment during the bonus plan year.

To discuss your company’s employment agreements, bonus plans, or employment law generally, please contact:

Mitchell S. Chaban at:

mchaban@lgattorneys.com or 312-368-0100

New Illinois Law Provides Greater Protections for Pregnant Employees

In August 2014, Governor Pat Quinn signed into law Public Act 98-1050, which is commonly referred to as the “Pregnancy Workers Fairness Act” (the “Act”). The Act, which becomes effective January 1, 2015, provides greater protections for pregnant workers, requiring all Illinois employers to provide reasonable accommodations to any employee or job applicant for pregnancy and child-birth related conditions, unless doing so would impose an undue hardship on the employer.

The Act amends the Illinois Human Rights Act to include pregnancy as a protected class. “Pregnancy” is defined as “pregnancy, childbirth, or medical or common conditions related to pregnancy or childbirth.” Employers are now required to provide pregnant employees with “reasonable accommodations”—the same type of accommodations employers are already required to provide to workers with temporary disabilities. Reasonable accommodations may include light duty, assistance with manual labor, and additional or extended bathroom breaks.  An employer may only refuse a requested accommodation if the employer can demonstrate that the accommodation presents an undue hardship on its ordinary business operations. The Act also prohibits discrimination in the hiring and employment of pregnant workers and those affected by a medical or common condition related to pregnancy or childbirth.

Employers must also post a notice regarding employees’ rights under the Act in a conspicuous location or include this information in the employer’s employee handbook.

To discuss any questions you may have about the effect of this new law on your business, please contact:

Kristen E. O’Neill at:

(312) 368-0100 / koneill@lgattorneys.com

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