Friday, February 27, 2009

Illinois Legislator Introduces Covenants Not to Compete Act

Yesterday, Rep. Rosemary Mulligan filed HB 4040 concerning employment covenants not to compete. The proposed legislation is comprehensive, with the following highlights:

(a) it limits non-compete agreements to "key employees" as defined by the act, but does not impact non-solicitation, no-hire or non-disclosure covenants;

(b) blue-penciling of unreasonable terms is discretionary, but will not allow an employer to obtain damages for any breach occurring before an order of modification;

(c) requires 2 weeks notice before an employee is asked to sign a non-compete (unless there is a bona fide advancement or promotion);

(d) defines legitimate business interests;

(e) creates rebuttable presumptions as to reasonableness regarding time (1 year), geography and type of activity;

(f) addresses attorneys' fees in the context of one-sided agreements or declaratory judgment claims.

The proposed act does not apply to stock forfeiture agreements, confidentiality agreements, restrictions among partners, or activity restraints.

No comments:

Post a Comment