On July 14, 2015, the United States Court of Appeals for the 7th Judicial Circuit affirmed the district court’s ruling that former employees of an information technology staffing firm were not liable for breach of restrictive covenants under Illinois law. Instant Technology LLC v. DeFazio, et al., Nos. 14-2132 & 14-2243 (7th Cir. 7-14-2015). The employees had signed employment agreements in which they agreed to not solicit business from the employer’s clients, recruit the employer’s employees to other jobs, or disclose confidential information. After the employees started a competing business, the employer filed a lawsuit against the employees in federal district court for breach of the restrictive covenants in their employment agreements. After a bench trial, the court concluded that the employees were not liable.

On appeal, the employer argued that the former employees poached its employees in violation of the covenant not to recruit, pitched candidates to the employer’s clients in violation of the covenant not to solicit, and pilfered the employer’s confidential information in violation of the covenant not to disclose confidential information. However, the 7th Circuit affirmed the district court’s holding that the restrictive covenants are unreasonable and unenforceable under Illinois law. In Illinois, a restrictive covenant in an employment contract is invalid if it does not serve a legitimate business interest. The existence of a legitimate business interest depends on the totality of the circumstances of each case. The district court concluded that the covenants did not serve a legitimate business interest of the employer. Most of the purported confidential information was publicly available on social media such as LinkedIn. And tech-staffing firms do not build relationships with clients that would justify restricting their employees from going out on their own.