In an opinion released on June 24, 2013, the Illinois Appellate Court stated that Illinois law "requires" two years of employment for a postemployment restrictive covenant to be enforceable. Fifield v. Dealer Servs., Inc., 2013 IL App (1st) 120327 (1st Dist. 2013).
Illinois courts have long held that "substantial continued employment" can constitute sufficient consideration for an enforceable restrictive covenant. In assessing what constitutes "substantial" continued employment, the courts have routinely found that terms of two years or greater constituted adequate consideration. Likewise, terms of less than one year have routinely been held to be insufficient consideration.
Illinois courts have previously rejected a "numeric formula" for determining how long the employment must last for there to be adequate consideration, finding that other circumstances may be relevant to the analysis.
In Fifield, however, the First District stated a two-year rule in mandatory terms: "there must be at least two years or more of continued employment to constitute adequate consideration in support of a restrictive covenant."
Fifield involved an employee who, as a condition of his employment, signed an agreement containing nonsolicitation and noncompetition provisions. Three months later, the employee resigned and began working for another company. The employee and his new employer sought declaratory relief in the Circuit Court of Cook County, which ruled that the restrictive covenant lacked adequate consideration and was unenforceable. The First District affirmed, holding that employment for three months was "far short of the two years required for adequate consideration under Illinois law."
Employers should be aware that under Illinois law, in order to have a valid, enforceable postemployment restrictive covenant, the employee may need to have had two years of continuous employment for the agreement to be deemed enforceable under Illinois law. Employers should consider, for example, the need to provide the employee with proprietary information and weigh it against the risk posed if the restrictive covenant should be found to be unenforceable.