One of the more commonly litigated aspects of the employer-employee relationship is the non-compete agreement. The Illinois Attorney General seems to be cracking down on employers that may be taking advantage of low-wage employees by signing illegal non-compete agreements (even if they are doing so unknowingly), especially in the context of the new Illinois Freedom to Work Act. A recent example comes in the form of a suit against Check Into Cash, LLC, alleging that its non-compete agreements violate Illinois law, including the Freedom to Work Act.
The Illinois Freedom to Work Act specifically forbids employers from entering into non-compete agreements with employees who are less than $13/hour. However, based on the allegations of the lawsuit, Check Into Cash requires all store employees to agree to a one-year non-compete agreement, even if they make less than $13/hour.
In addition to this new requirement, Illinois law also requires that non-compete agreements are based on a legitimate business interest of the employer and narrowly tailored with regard to time, geographic location, and activity. As to these other restrictions, the suit against Check Into Cash alleges that the non-compete is not narrowly tailored with regard to time, location, and activity because:
(i) It prohibits employees from working within 15 miles of any Check Into Cash store location (as compared to just the store at which the employee works);
(ii) It prohibits employees from working directly or indirectly with any entity that provides any consumer lending services whether they compete with Check Into Cash or not;
(iii) It applies to all employees regardless of position or time spent at the company; and
(iv) It applies to employees making less than $13/hour.
Many businesses, especially small businesses, think they can pull a non-compete agreement from the internet and use it with their employees, but that is simply not the case. This area of law often changes, as shown by the new Illinois Freedom to Work Act, and your business’s non-compete agreement must adapt to constantly evolving and interpretable laws of each relevant state. A non-compete agreement pulled from the internet will not likely conform to your specific state, and are often found to be invalid agreements by reviewing courts.
Overall, an Illinois non-compete agreement should be narrowly tailored in time, activity, and geography in order to protect an employer’s legitimate business interests. It should also comply with the Illinois Freedom to Work Act. Finally, it should be supported by adequate consideration. Although there are many takeaways here, the main one, and most urgent, is that if your business requires employees that make less than $13/hour to sign a non-compete agreement, you are may well be in violation of the Freedom to Work Act. The attorneys at Rock Fusco & Connelly can make sure your business’s non-compete agreements comply with this ever-changing area of law.