Wednesday, May 25, 2011

Supreme Court of Illinois Grants Leave to Appeal in Reliable Fire Equipment

Today the Supreme Court of Illinois granted an employer's leave to appeal in Reliable Fire Equipment v. Arredondo, the Second District case last year which added new confusion to non-compete law in Illinois.

Following Reliable Fire Equipment, the five appellate courts in Illinois were left to apply three different "protectable interest" tests. The Court had little choice but to resolve this conflict among the appellate districts.

The case represents the Court's first true opportunity to enunciate a standard by which employment-based non-compete agreements will be judged. I believe the Court will adopt some variant of the traditional test widely used across many jurisdictions, which allows enforcement of non-compete agreements if: (a) the covenant is reasonable and not greater than is required for the protection of the employer; (b) the covenant does not impose an undue hardship on the employee; and (c) the covenant is not injurious to the public interest.

Element (a) is almost always an issue in litigation and encompasses traditional hot-button issues like a covenant that is too long, too extensive in geographic reach, or too broad in scope. It also would require a court to analyze the breadth of the covenant in relation to the interest an employer seeks to protect.

Also, it is element (a) where Illinois courts have gotten lost on a detour for the last, oh, 70 years or so. The Court is unlikely to issue an opinion in Reliable Fire Equipment until early 2012.

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