This is Part III in a series discussing the recent holding in Reliable Fire Equipment v. Arredondo. Please scroll down for prior posts and information about this case.
The concurring opinion in Reliable Fire Equipment clarifies a great deal about how to evaluate restrictive covenants in Illinois. The thrust of the concurrence is that there are no hard and fast rules about what qualifies as a "legitimate business interest" in terms of a non-compete's enforceability. Justice Hudson correctly noted that the cases have been less than clear on how rigid Illinois' two-part test was.
As it stands now, courts within the Second District will have to assess the employer's legitimate business interest under a "totality of the circumstances" test. This is more in line with the intensely fact-based nature of non-compete cases, departs from the two-part test used by courts, and expands the overall analysis to more than "time, territory and scope" as is currently used in the Fourth District.
As I have mentioned before, courts in many states look at an array of protectable interests, from customer contacts and access to confidential information to unique services and special training. In Illinois, the inquiry has been very narrow and many fact patterns just don't seem to fit the analysis at all.
On Wednesday, I will discuss this in more detail about what may be next after Reliable Fire Equipment, but for now, employers may take some comfort in the fact that other interests may be used to justify a restriction on competition. Just by way of example, an employer may now be able to enforce covenants against not only those employees who "attempt" to use confidential information against an ex-employer, but also against those whose employees whose position poses an inevitable risk of disclosure of confidential information.
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