Continuing the saga of whether continued employment is sufficient consideration to support a restrictive covenant agreement, the Illinois Supreme Court, on September 25, refused to review Fifield v. Premier Dealer Services, Inc., No. 1-12-0327, 2013 IL App (1st) 120327 (Jun. 24, 2013)—a controversial Illinois Appellate Court decision on the enforceability of restrictive covenants. The Illinois Supreme Court’s decision means that Fifield’s mandate that two-years of continued employment is required for an employer to enforce a post-employment restrictive covenant is now binding precedent in a large part of Illinois.
Before Fifield, the long-standing majority position was that if an employee signs a post-employment restrictive covenant at the outset of his or her employment, the job itself is sufficient consideration for the agreement to be enforced. However, if an employer requires an employee to sign a restrictive covenant during the employment relationship, Illinois courts had held that two years of continued employment would be required for that agreement to be enforceable.
Deviating from the majority, the Fifield court extended application of this continued employment doctrine, essentially rendering the timing of the signing of the restrictive covenant agreement irrelevant. The Fifield court held that Illinois law requires two years of continued employment for an employer to enforce a post-employment restrictive covenant, regardless of when the employee signed the agreement.
As a result of the ruling, employers that require new hires to sign a restrictive covenant but don’t offer any other consideration for signing won’t be able to enforce that covenant until the employee has worked for two years. For tips on ensuring the enforceability of your restrictive covenant agreements, see our October 15 Illinois eAuthority.
This article was authored by an attorney in the Chicago office of Ogletree Deakins.