Contributed by Jeff Glass
The Illinois Supreme Court has declined to review the Fifield decision. Fifield is the June 2013 case where the Illinois Appellate Court for the First District (Cook County) held that employment at will was not adequate consideration for a restrictive covenant (i.e., non-competes, non-solicitation clauses, etc.) This was a change in the law since, historically, employers did not have to offer any extra consideration when new hires signed restrictive covenants.
Under Fifield, employers whose employees had signed restrictive covenants would need to either provide them with consideration like a signing bonus, or hope that they stayed on for two years since Illinois courts have held that the consideration requirement is satisfied by two years of subsequent employment.
Now that the Illinois Supreme Court has declined to review Fifield, employers face certain realities. If you are in Cook County, Fifield is controlling law. Your employees may be emboldened to test the enforceability of their covenants. The most aggressive way to address that risk would be to have employees sign new covenants and provide them with consideration. That can be expensive. However, the consideration need not be a cash payment. There are creative ways to structure consideration such as severance, additional vacation, etc.
Alternatively, employers can offer consideration only to employees that may do harm if they leave. That is cheaper but creates its own problems since employees who don’t receive anything will grumble. This problem can be reduced, but not eliminated, by rolling out bonuses in performance reviews or similar one-on-one settings.
Another option is to offer nothing and hope that they stay for two years.
In the event you must litigate this issue, you do have arguments. Although Fifield is being interpreted as altering the rules for new hires, the facts before the court were that: (1) a long term employee’s employer was sold; (2) the new employer “fired” everyone and then re-hired them the next day; but (3) required a non-compete as a condition of re-hire. It really was analogous to having an existing employee sign a non-compete, which traditionally requires additional consideration or continued employment of two years. Fifield should be confined to its facts.
Still further, the cases Fifield cited were not on point and it failed to cite, let alone distinguish, the multitude of cases holding to the contrary. So, if you need to litigate Fifield, it isn’t hopeless. But you will have an uphill battle.
If you are not in Cook County, the argument would be that, in addition to the problems just discussed, the First District’s flawed decision should not be binding on the other Districts. Ideally, one of the other Districts will reject Fifield, creating a split among the Districts and giving the Supreme Court another opportunity to take up the issue.