Can I Require My Employees to Sign Non-Compete Agreements?

non-compete, DuPage County contract lawyersIn today’s highly competitive world, many employers insist that their employees sign non-compete agreements or NCAs. Also called non-competition agreements, these documents are especially popular for employers who hire workers with unique abilities or specific talents. In general, employers have the right to attempt to limit the impact to their brand caused by an employee leaving, but a non-compete agreement could be declared unenforceable if an employer overreaches. Put simply, NCAs can help protect your company, but they must be used properly.

The Basics of Contract Law

If you intend to have your employees sign an NCA, you probably expect the document to be a valid contract. This means that the NCA must meet the requirements of any other contract. Under Illinois law, these requirements are an offer, acceptance, and consideration for both parties. Basically, both sides must reach an agreement to exchange something for another thing—in most cases, the trade is a form of payment in exchange for goods or services. “Consideration” refers to what each party receives. For example, a purchase at a grocery store is essentially a simple contract. The store offer eggs for sale at a specific price—the “terms” of the contract. By handing over your money, you accept those terms. The store receives your money as the consideration, and you receive the eggs as your consideration.

In the past, the consideration offered in exchange for signing a non-compete agreement was the continuation of employment. Essentially, “sign this and you will be allowed to work here.” Unfortunately, this led to employers hiring certain employees for a very short period of time, requiring them to sign NCAs, then terminating them, leaving them without the ability to find work in their field. In 2013, Illinois courts determined that such practices were unethical, and two years of continued employment was found to be sufficient consideration.

Other Important Factors

Under Illinois law, there are generally four factors that will determine the viability of your NCA. If any of the four is found to be lacking, the entire agreement may be set aside:

  • Scope: The scope of your NCA is important, especially if your business operates in a narrow field. It is reasonable to require NCAs for employees with uncommon or unique training. However, it is unreasonable to ask minimum-wage cashiers or laborers to sign NCAs to stop them from doing similar work at another company.
  • Legitimate business interests: It is not enough to want an NCA; you must have something to protect. In many cases, this “something” might be proprietary interests, processes, or information that could damage your company if it was given to a competitor.
  • Area: The geographic factor of an NCA is becoming more complex in the digital age, but your NCA still cannot be overly restrictive. For example, it is understandable that your NCA might prevent an employee from working for a competitor in DuPage County, but trying to restrict competition in the entire state of Illinois is less understandable.
  • Duration: The average NCA is set up to last for two years or less. Drafting an agreement that lasts longer will increase the chances of it being deemed invalid on the basis of unconscionability.

If an NCA is overbroad on any of these factors, it could be considered “restraint of trade.” This will nearly always result in the agreement being unenforceable. So, the answer to the question is “Yes.” You can require certain employees to sign a non-compete agreement, but it will only be enforceable if the terms are reasonable.

A Wheaton Contract Attorney Can Help

For more information about non-compete agreements or any other business contracts in Illinois, contact a DuPage County business lawyer. Call 630-665-2500 to schedule a confidential consultation at Stock, Carlson, Oldfield & McGrath LLC today. We will work with you in developing legally sound, enforceable business agreements that are designed to protect you and your company.

Sources:

http://www.businessdictionary.com/definition/restraint-of-trade.html

http://www.illinoiscourts.gov/circuitcourt/civiljuryinstructions/700.00.pdf

Why Does Wording Matter in Business Contracts?

wording, Wheaton business contract lawyersMost people were taught at a reasonably young age to be sure to read anything they sign, especially documents that create a contractual relationship. If you own a business, you probably realize the importance of doing so now more than ever. The reason is simple: the wording of your contracts matters a great deal. Moreover, the way that a contract is worded is crucial to the enforceability of the agreement. One misunderstood clause or provision could cost your company thousands of dollars, and the contract might not be enforceable in the way that you understood it to be.

How Poor Wording Can Cost Your Business

Nearly all business transactions are guided by some type of contract, including those between you and your suppliers, your clients, and even your employees. The reality is that poor wording or confusing language in a contract can put your company at risk in just about every way you can imagine. You could face legal action for failing to meet your customers’ expectations. You could find yourself on the short end of deals with your suppliers. You could even be facing wrongful termination lawsuits and other litigation related to your employees.

Key Elements of Business Contracts

Each contract is going to be different, as various types of contracts are used to serve specific purposes. For this reason, you should work with a qualified business contact attorney before signing any agreement with a partner, distributor, supplier, employee, customer, or client. This can allow you to be sure that the wording of the contract does not put your company at risk and that you did not overlook any elements that should have been included in the contact. Such elements may include, but are not limited to:

  • Clear verbiage in simple language to reduce misunderstandings;
  • A section that defines the terms as they used in the agreement;
  • Warranties, limitations, and exclusions that are applicable to specific products or services;
  • Limitations on liability or liability exclusions, as appropriate;
  • Provisions on how disputes regarding the contract;
  • A provision that releases both parties from the contract if unforeseen circumstances should occur; and
  • All relevant details about the services and products, such as pricing, payments, interests, and penalties.

Contract Review Is Crucial

Whether you have drafted the contract yourself or the contract was drawn up by the other party, you should always have it reviewed by your lawyer before you sign it. Your attorney can help you identify possible areas of concern and can propose changes that might need to be made to protect your best interests.

Call a Wheaton Contract Lawyer for Help

At Stock, Carlson, Oldfield & McGrath LLC, each of our attorneys has over 40 years of legal experience, and we are equipped to help you with all of your business contract concerns. For guidance with drafting a new contract or to have a contract reviewed, contact an experienced DuPage County business lawyer at our firm. Call 630-665-2500 for a confidential consultation

 

Sources:

https://smallbusiness.chron.com/write-contract-verbiage-17516.html

http://www.forbes.com/sites/allbusiness/2013/10/03/big-legal-mistakes-made-by-start-ups/

How to Protect Your Business from Personal Injury Lawsuits

injury, Wheaton business lawyersIf you own a business, there is a good chance that your employees, suppliers, vendors, and, obviously, your customers will regularly on your property. You will, undoubtedly, work hard to protect the well-being of each person who visits your business and to give them a safe and comfortable experience at your place of business.

Unfortunately, however, accidents do happen from time to time, and when they occur, people are sometimes injured. Believe it or not, injury-causing accidents can even occur on your property, leaving you potentially open to a personal injury claim. The good news is that there are several things that you can do to limit your possible liability if someone is even injured while visiting or working at your company.

Proactive Measures

The best way to limit your personal injury liability, of course, is to prevent accidents from happening as much as possible. This means that you need to have preventive measures in place against potential injuries instead of reacting to accidents when they occur. Such preventive measures generally include comprehensive safety policies, procedures, and protocols throughout your business.

You should also identify possible areas of concern, such as doorways with mats on the floor that could become a tripping hazard. Similarly, understand and anticipate weather-related issues, such as accumulations of snow and ice and damage caused to your parking lots and walkways by exposure to the elements.

Necessary but dangerous maintenance activities should be conducted outside of your peak customer hours, for sure, and outside of business hours completely if possible. Making repairs, mopping floors, and replacing light bulbs in the ceiling, for example, can most likely be done before you open or after you close for the day.

Constant Vigilance

Having a plan is great, but you need to implement it and make it part of your business culture. If safety is a common topic that is addressed through regular communication, training sessions, and meetings, it will never be far from your team’s minds. Be open to safety ideas from every single member of your staff. If an idea will reduce the chance of an accident, it should not matter who came up with it—get it implemented as soon as you can.

Your safety policies should be clearly written out in your employee handbook, which should define the responsibilities of each person in your company for preventing injury-causing accidents. You might also consider including safety violations in your company’s disciplinary policy, as well as offering incentives for meeting safety-related goals. While you might not be able to stop every accident, actions such as these can demonstrate that you are not negligent in regard to safety.

Adequate Insurance

If you have employees, you must have workers’ compensation insurance to cover them in the event of a work-related injury. However, there is no state or federal requirement for your company to have commercial liability insurance. Without liability insurance, a single accident could potentially bankrupt you and your company. Before you speak to an insurance broker, talk to a qualified attorney. A broker is going to try to sell you policies based on the commission that he or she will receive, while your lawyer will objectively help you determine your potential risks and the amount of liability protection you need. Then you can find the liability policy or policies that offer the desired level of security.

Call a Wheaton Business Law Attorney

At Stock, Carlson, Oldfield & McGrath LLC, our experienced DuPage County business lawyers can help you protect yourself and your company in the event of an injury-causing accident. Call 630-665-2500 to schedule a confidential consultation with a member of our team today.

 

Source:

https://www2.illinois.gov/sites/iwcc/resources/Pages/faq.aspx