SimplyHR | Employment & Labor Blog 

In the last few months, several court decisions have found large classes of workers to be improperly classified as independent contractors rather than employees. These class action cases are filed in federal and state courts throughout the country seeking the payment of minimum wage, overtime, penalties, attorneys’ fees, employee benefits and expenses, among other damages. Although FedEx Ground Package System, Inc. has been at the heart of several recent decisions, the issue is not isolated to FedEx nor to delivery drivers. Rather, a survey of recent cases and agency actions makes it clear that the judiciary, Internal Revenue Service, United States Department of Labor, and state agencies are all looking with exacting scrutiny at independent contractor relationships and are erring on the side of finding workers to be employees. Consequently, all companies that use independent contractors – regardless of their size – should think about the impact of the emerging cases on their workforces.

Business Tip: Include a liquidated damages clause in your restrictive covenant agreements that clearly sets forth how damages will be calculated in the event your employee breaches the non-competition agreement.

As a President, CEO or General Counsel of your company, you have recognized the need to have your key executives and employees enter into non-competition or non¬-solicitation agreements. Those non-competition agreements are usually a cost effective way to stop your key executives and employees from competing against when they leave your company. However, in those instances where you have to go to court to enforce your non-competition agreement, the experience can be costly, in terms of attorneys' fees, your time and your company's resources.

Business Tip: Include extension clauses in your restrictive covenant agreements to ensure that the time of the restrictions will not begin to run until the employee has stopped violating the restrictions.

In order to make sure that an employer gets the full benefit of the restrictive time period in its non-competition, non-disclosure or non-solicitation agreements, employers in Illinois should make sure that such agreements contain "extension clauses." Extension clauses will extend the time period or modify the start date of the restrictive covenant in the event that an employer does not discover the former employee's breach until near the end of the restrictive time period or the employee continues to violate the restriction during litigation.