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Are noncompetes still enforceable for terminated employees?

On Behalf of | Mar 11, 2020 | Employment Contracts

Intellectual property can be a substantial liability. That’s because many employees often have access to this information. To ensure their most valuable trade secrets are protected, business owners likely enforced noncompete agreements to keep them this data out of the hands of competitors.

But sometimes, an employee’s departure isn’t always voluntary. This can create concerns, especially if they felt their dismissal was unfair. When this happens, business owners may wonder if their agreement is still enforceable.

How termination affects a business’s noncompete agreement

Luckily, courts usually uphold noncompete agreements. However, they may find some unenforceable. Here are a few examples:

  • Unreasonable restrictions: Courts often understand employees need consistent income. If they think the agreement’s job restrictions are too broad or too long, they may reject it. That’s because some may see it as unreasonable to keep someone out of the workforce for more than six months.
  • Geographic limitations: As Chicago is one of the largest cities in the nation, businesses in and around the metro have endless and aggressive competition. Sadly, this can also mean that courts may not enforce noncompete agreements that span citywide. However, courts may uphold regional restrictions for surrounding counties. For example, if an employee got terminated from an insurance company in Cook County, they could find a similar position at another insurance company in nearby Du Page County, as long as they don’t compete directly with their former company.

Businesses can still seek damage for contract violations

Businesses hope their former employees will respect their wishes and protect their trade secrets and intellectual property. But some choose to burn bridges. If they do violate agreement provisions, they can sue their former worker and their new employer to get compensation.