The Good, The Bad And The Ugly: Recent Changes Radically Alter The Landscape For A Company’s Employment Agreements

First, The Good:

The U.S. Supreme Court recently issued a decision (American Express v. Italian Colors, LLC) that paves the way for employers to limit employees’ use of class actions for certain claims if an arbitration provision in an employment agreement is properly implemented. This case isn’t a magic pill that eliminates class actions entirely, but employers finally have a tool to hopefully avoid meritless class actions filed by ruthless class-action plaintiff attorneys.

Next, The Bad:

In June 2013, Illinois’ First District Appellate Court (Fifield v. Premier Dealer Services, Inc.) eliminated an offer of employment as adequate consideration to support non-competes and other restrictive covenants. The Court ruled that employment is not sufficient consideration because it is an “at-will” relationship. Employment is sufficient only if it continues for two years or more.

And, The Ugly:

Your company’s current employment agreements are unenforceable unless (a) the employee received separate and additional consideration (NOT just a new job or continued employment); or (b) the employee signed the agreement more than two years ago. The only good thing about redoing all those agreements is that you can add the arbitration and class action prohibition language from the U.S. Supreme Court case and maybe save your company hundreds of thousands in fees and settlement money.

Please let us know if you would like us to update your employment agreements or create some for you.

If you need help with any employment issues, contact Laura A. Balson, (312)696-1351, or Margaret A. Gisch, (312)696-2039,