Federal Court Rejects “2-year” Bright Line Rule for Employee Non-Compete Agreements

By: Jeanne Hoffmann, Capital Member

In R.J. O’brien & Associates, LLC v. Williamson, 14 C 2715, 2016 WL 930628 (N.D. Ill. Mar. 10, 2016)(Judge Gettleman,) the U.S. District Court for the Northern District of Illinois declined applying a “bright line” rule (minimum of 2 years of employment,) finding adequate consideration to enforce a non-compete agreement against a former employee.

R.J. O’Brien & Associates, LLC sued former employee, Robert Williamson, alleging a confidentiality and non-solicitation agreement breach. Williamson worked for R.J. O’Brien for one year, then resigned and worked for a competitor. He then began soliciting R.J. O’Brien’s other employees to work for his new employer, violating his employment contract’s restrictive covenants.

Williamson argued that the post-employment confidentiality agreement and restrictive covenants non-compete agreement were invalid, because they lacked adequate consideration to support contractual undertaking. Williamson’s argument was based on earlier Illinois Appellate Court and federal district court decisions holding that there must be two or more years of continued employment to constitute adequate consideration supporting an employee’s covenant not to compete with the employer post-termination.

However, R.J. O’Brien’s argument discussed several earlier state and federal court decisions rejecting applying the two-year bright line rule in favor of considering other factors (e.g., whether the employee quit or was fired, other compensation or job perks.) Considering other factors, including that Williamson quit to work for a competitor after one year, the Court concluded that the post-employment restrictive covenants were valid.

 

Chicago, Illinois 312-377-1501 | Schererville, Indiana 219-488-2590

Chicago, Illinois

312-377-1501


Schererville, Indiana

219-488-2590