How to Draft Enforceable Non-Compete Agreements
Non-compete agreements are a common tool for protecting business interests. These agreements must meet specific standards to be enforceable. Companies often use non-compete agreements to safeguard confidential information, customer relationships, and investments in employee training.
Illinois employment law imposes strict requirements on the scope and structure of these agreements. A poorly drafted non-compete may not only be unenforceable but could also expose employers to litigation.
With experienced employment law attorneys, our firm, Donna Craft Cain PC, serves clients throughout Villa Park, Cook County, Kane County, Will County, McHenry County, Lake County, and DuPage County.
For businesses operating in these areas, we can help you know that the legal expectations are key to creating non-competes that courts will uphold. Contact us today to schedule a consultation.
Reviewing Illinois Law on Non-Competes
Illinois has adopted a cautious approach to non-compete enforcement. Under the Illinois Freedom to Work Act, updated in 2022, there are clear limits on when and how employers can use these agreements.
For example, employers may not require non-competes for employees earning less than $75,000 per year. That threshold increases every five years. Additionally, any restriction must be narrowly tailored to protect legitimate business interests.
Illinois courts apply a three-part test to determine if a non-compete is enforceable:
The restriction must support a legitimate business interest.
The agreement must not impose an undue hardship on the employee.
The terms must not harm the public interest.
Understanding these legal boundaries is the first step toward drafting a valid non-compete agreement.
Identifying a Legitimate Business Interest
To satisfy Illinois employment law, a non-compete must serve a valid business purpose. Courts often look for protection of:
Confidential or proprietary information
Trade secrets
Customer relationships developed through the employer
Investment in the employee’s training
It’s not enough to simply want to avoid competition. Employers must be able to point to specific assets or relationships they’re trying to protect. This part of the analysis requires thoughtful consideration of the employee’s role and access to sensitive information.
Drafting Clear and Reasonable Restrictions
A non-compete must be drafted with precision. Overbroad or vague language can make the entire agreement unenforceable. Courts examine three main restrictions: scope of activity, duration, and geographic area.
Scope of activity: The agreement should clearly define what type of work or business activity is restricted. This must relate directly to the employee’s former duties. Blanket prohibitions on working in an entire industry are likely to be struck down.
Duration: The length of the restriction should be reasonable. Illinois courts usually find that one to two years is acceptable. Anything longer requires a strong justification.
Geographic area: The territory covered must be tied to where the employee actually worked or where the employer does business. A nationwide restriction is unlikely to survive unless the company operates on a national level.
Each of these elements must be carefully tailored. Courts won't rewrite an agreement that goes too far—they will simply reject it.
Providing Adequate Consideration
Under Illinois employment law, a non-compete must be supported by valid consideration. That means the employee must receive something of value in return for signing the agreement.
If the agreement is signed at the beginning of employment, the job offer itself can serve as consideration. However, for existing employees, continued employment alone isn't enough unless it lasts for at least two years. To strengthen enforceability, employers often provide:
A signing bonus
Stock options
A promotion or pay increase
Additional benefits not previously offered
Providing adequate consideration isn't only legally necessary—it also increases the likelihood the agreement will be upheld in court.
Avoiding Overreach With Low-Level Employees
Illinois law is particularly protective of employees with limited decision-making authority. Employers must avoid imposing non-competes on individuals who don't have access to sensitive information or strategic client relationships.
For example, an administrative assistant with no sales responsibilities wouldn't typically meet the criteria for a legitimate non-compete. Courts are more likely to enforce restrictions on high-level salespeople, executives, or employees with access to trade secrets.
Employers should consider whether each employee presents a real competitive risk. If not, it may be better to use a confidentiality or non-solicitation agreement instead.
Including Severability and Blue-Pencil Clauses
To help protect the enforceability of a non-compete, it's common to include a severability clause. This allows a court to strike an unenforceable provision without invalidating the entire agreement.
Some Illinois courts may also apply the “blue pencil” rule, which permits judges to modify unreasonable terms. However, courts aren't required to do so. Including language that invites judicial modification can improve the chances of partial enforcement.
These provisions serve as legal safety nets. While they won't rescue a poorly written agreement, they can provide flexibility if one clause is too broad or burdensome.
Complying With Procedural Requirements
In 2022, Illinois added procedural protections for employees asked to sign non-compete agreements. Employers must now:
Advise the employee in writing to consult an attorney
Provide at least 14 days to review the agreement before signing
Failure to comply with these requirements could render the agreement void. These rules apply regardless of the employee’s position or salary level. In addition to legal compliance, these steps also improve fairness and transparency. Giving employees time to review the agreement reduces the likelihood of future disputes.
Considering Non-Solicitation as an Alternative
In some cases, a non-solicitation agreement may serve the employer’s goals more effectively than a non-compete. These agreements restrict former employees from contacting or working with the employer’s customers or employees after departure.
Illinois courts are more likely to uphold non-solicitation clauses because they are narrower in scope. They allow the former employee to continue working in their field while protecting the client relationships the employer developed.
When drafted properly, a non-solicitation clause can offer strong protection without raising the same legal risks as a full non-compete.
Customizing Language for DuPage County Employers
DuPage County employers should consider regional and industry-specific factors when drafting non-compete agreements. Courts in this area look closely at the nature of the business and the competitive environment. What works for a tech company in Naperville may not be appropriate for a logistics firm in Addison.
Working with an attorney familiar with local employment law can help you tailor agreements to reflect the real risks facing a business. Cookie-cutter language pulled from generic templates rarely meets the necessary legal standards.
Employers should review and update non-competes regularly to reflect changes in employee roles, compensation, or company strategy. A well-drafted agreement reflects current business conditions and accurately defines what needs protection.
Enforcing a Non-Compete in Court
Even a well-drafted non-compete may require court enforcement. When a former employee violates the agreement, employers can seek an injunction to stop the activity. To do so, they must show:
A valid and enforceable agreement exists
The employee breached the terms
The breach caused or will cause harm to the business
Courts weigh the harm to the employer against the burden on the employee. If the agreement is too broad, even temporary enforcement may be denied.
Employers should act quickly if they believe a former employee is violating a non-compete. Delays can weaken the argument for injunctive relief. Prompt legal action signals the seriousness of the restriction and improves the chances of success.
Avoiding Common Mistakes
Many employers unintentionally weaken their non-compete agreements by making common mistakes. These include:
Using outdated templates that don't reflect current Illinois law
Applying one-size-fits-all restrictions to every employee
Failing to provide meaningful consideration
Drafting overly broad or vague terms
Ignoring statutory notice and procedural requirements
Each of these missteps increases the risk that a court will reject the agreement. Employers should take the time to review and revise each agreement based on the specific role and risk level associated with the position.
Drafting enforceable non-compete agreements requires attention to both legal standards and practical realities. Illinois employment law places clear limits on when and how these agreements can be used. Employers must identify a legitimate business interest, offer proper consideration, and keep the scope reasonable.
By taking a measured and thoughtful approach, businesses can protect their interests without violating employee rights. Non-compete agreements should be carefully customized to reflect the employee's role, compensation, and access to sensitive information.
Regular review and clear communication are essential. When non-competes are drafted correctly, they can serve as a valuable tool in protecting what matters most to the business—its relationships, strategies, and confidential resources.
Call Donna Craft Cain PC Today
Employers in DuPage County who want to use non-compete agreements should do so with care. With the right strategy, these contracts can support long-term business goals while remaining enforceable under Illinois law.
Call our firm at Donna Craft Cain PC today. Our business law attorneys serve clients in DuPage County, Villa Park, Cook County, Kane County, Will County, McHenry County, and Lake County, and throughout Illinois.