Employer’s Non-Compete Agreement Rejected by Court

LAURA A. BALSON

Partner

MARGARET A. GISCH

Partner


Employer’s Non-Compete Agreement Rejected by Court

In a surprising decision, a federal court in Illinois recently determined a frequently used clause in non-compete agreements was overly broad. In Medix Staffing Solutions, Inc. v. Dumrauf, the court found that a clause prohibiting a former employee from taking any position with another company that engaged in the same business as his former employer was overly restrictive. The court found the clause improper because it failed to consider what services the employee actually performed for his former employer or whether his new employer was really a competitor. The court was concerned that the clause could prohibit employment with a company that was not actually a competitor finding it wrongfully prohibited the employee, “from taking any number of more plausible roles at another industry player, no matter how far removed from actual competition with [his former employer].” Rather than judicially modifying the agreement to be more reasonable, the court threw out the entire agreement.

In light of this recent ruling, Golan Christie Taglia LLP recommends that companies review their existing non-compete agreements to ensure that they are reasonable and narrowly tailored to protect the company’s business interests without excessively restricting a former employee from finding future employment. Some factors to be considered include the length of the non-compete, the geographic area, and the scope and purpose of the non-compete.

If you have questions or need additional information, please contact an employment attorney at Golan Christie Taglia LLP.