On December 11, 2014, the Illinois Appellate Court, Third District, reversed the trial court’s order granting a preliminary injunction that enforced a noncompetition agreement. Prairie Rheumatology Associates v. Francis, 2014 IL APP (3d) 140338. The restrictive covenant, part of a physician’s employment contract, prohibited the physician from competing with her employer within a 14-mile radius of its office for two years after the termination of her employment. Under Illinois law, a post-employment restrictive covenant is enforceable only if it is reasonable in geographic and temporal scope and necessary to protect an employer’s legitimate business interest. A restrictive covenant is reasonable only if it: (1) is no greater than required to protect a legitimate business interest of the employer; (2) does not impose undue hardship on the employee; and (3) does not harm the public.
However, a court must first determine: (1) whether the covenant is ancillary to a valid employment contract; and (2) whether there is adequate consideration to support the covenant. Without consideration, a noncompetition clause is unenforceable, without regard to reasonableness. Continued employment for a substantial period of time may support a noncompetition provision of an employment agreement. But less than two years’ employment will not, even if the employee resigns before the two-year mark, like the physician in Prairie Rheumatology, who resigned after 19 months. In striking down her noncompete, the Third District followed Fifield v. Premier Dealer Services, Inc., 2013 IL App (1st) 120327, in which the First District established the rule that less than two years of continued employment is insufficient to support a noncompetition agreement. There are other types of consideration that may support a restrictive covenant, such as the payment of a bonus. Consideration should be on the forefront of every employment lawyer’s mind when drafting a noncompetition agreement.