Impact | Business Risk Management Blog

Blog Editor



If You Overreach, A Business Owner May Find Employee Restrictive Covenants to be Useless and Unenforceable
By Thadford Felton on August 13, 2014 at 9:54 AM

Increasingly, the Illinois Appellate Courts are placing restrictive covenants under greater scrutiny. This heightened scrutiny was reflected again in Critical Care Systems, Inc. v. Dennis Heuer, a recent decision from the Illinois Appellate Court for the Second District.

In this case, the defendant former employee, a managing pharmacist providing home infusion care services, executed two noncompetition and confidentiality agreements with his employer – one in 2008 and the other in 2011. In 2012, defendant resigned his position and took a similar position with a direct competitor of the plaintiff, who was also named as a defendant. Plaintiff alleged that the defendant former employee was providing the same services and soliciting its clients and using its confidential information in violation of the restrictions in his 2011 noncompetition and confidentiality agreements. The plaintiff moved to enjoin its former employee from competing against it and using its confidential information.

The appellate court upheld the trial court’s decision not to enforce the restrictive covenants. The court found that the plaintiff lacked a protectable business interest and the geographic restrictions in the agreements were overly broad as they applied to all states contiguous to Illinois. Furthermore, plaintiff failed to establish the existence of confidential information. Finally, the court declined plaintiff’s request to re-write the restrictive covenants to make them reasonable and enforceable.

The take away for business operators is that while it is tempting to try to bind your employees with broad restrictive covenants, the trend in Illinois (and other courts across the country) is for courts to decline to enforce overly broad restrictive covenants. Furthermore, you cannot rely on Illinois courts to rewrite overly broad restrictive covenants. As a result, business owners have to make sure that the restrictive covenants in their agreements with employees are narrowly tailored to protect just their legitimate business interests.

Facebook Twitter LinkedIn Google+ Email

This website uses cookies to improve functionality and performance. If you choose to continue browsing this website, you consent to the use of cookies. Read our Privacy Policy here for details.