When an individual purchases a business, they are not only buying the physical assets associated with that business. They are also taking ownership of more abstract assets like the existing customer base, the name and reputation of the business, and intellectual property. Understandably, someone who buys a business wants to ensure that the value of these intangible assets is not reduced because the original owner of the business is opening a competing business in the same market. This is just one of many situations in which a non-compete agreement can be beneficial.
How Does a Non-Compete Agreement Work?
Put simply, a non-compete agreement is a legally-binding contract involving a promise not to enter into business competition of some kind. Non-compete clauses are most often used to prevent an employee from working for a competitor or starting a business which competes with his or her employer’s business. These agreements can also include a provision prohibiting the employee from disclosing proprietary information to other parties. Non-compete agreements are often also required of business consultants and contractors.
Non-Compete Agreements Must Meet Certain Criteria to be Enforceable
Of course, a non-compete agreement cannot simply instruct an employee to never again work in a certain field. The scope and duration of a non-compete must be reasonable for the contract to be valid. Illinois courts have ruled that non-compete agreements are only valid if certain criteria is met. It is advised that any business utilizing a non-compete in Illinois provides employees with continuous employment for at least two years as well as additional consideration in the form of perks like bonuses or higher compensation.
If a non-compete agreement does not meet the criteria required by Illinois law, the agreement may be completely unenforceable. There can be unexpected and serious repercussions when a non-compete agreement is not legally binding. The best way to ensure that you employee contracts are valid, reasonable, and effective is to have these contracts reviewed by a qualified business law attorney.
Contact an Illinois Non-Compete Agreement Attorney
If you are a current business owner, plan to buy a business, or have business law-related needs, the skilled Arlington Heights business law attorneys at A. Traub & Associates can help. We have provided the Cook County community and surrounding areas with knowledgeable business law counsel since 2001 and have the experience and education required to assist you with a wide range of business concerns. Call us at 847-749-4182 to schedule a personalized consultation.