United States: A Comparison Of Illinois And Florida Law Governing Non-Compete Agreements


This is one of several posts comparing the laws governing non-compete agreements in states other than Florida with Florida's non-compete laws. The purpose behind such comparisons is simple – Florida courts from time to time must interpret non-compete agreements which are governed by the laws of another state. These posts allow readers to gain a basic understanding of how other states approach disputes concerning non-compete agreements. Further, the posts will hopefully provide readers with a better understanding of the similarities and differences of Florida's non-compete laws with those of other jurisdictions.

Summary of Illinois Non-Compete Law

Given Chicago's presence in Illinois, it should come as no surprise that Illinois has a long history of law governing non-compete agreements. As early as 1896, the Illinois Supreme court recognized the validity of non-compete agreements in Hursen v. Gavin, 162 Ill. 377, 380, 44 N.E. 735 (Ill. 1896):

But a contract, which is only in partial restraint of trade, is valid, provided it is reasonable and has a consideration to support it. The restraint is reasonable when it is such only as to afford a fair protection to the interests of the party, in whose favor it is imposed. If the restraint goes beyond such fair protections, it is oppressive to the other party and injurious to the interests of the public, and, consequently, void upon the ground of public policy.

(Citations omitted).

In Illinois, the validity of non-compete agreements is governed by common law. Fisher/Unitech Inc. v. Computer Aided Technology, Inc., et al., No. 13 C 020900, Slip Op. at *3 (N.D. Ill. April 9, 2013), citing Reliable Fire Equipment Co. v. Arrendondo, 965 N.E.2d 393, 396 (Ill. 2011). Like New York, Illinois adopts "[t]he modern, prevailing common-law standard of reasonableness for employee agreements not to compete." Reliable Fire Equipment, 965 N.E.2d at 396, quoting BDO Seidman v. Hirshberg, 712 N.E.2d 1220, 1223 (N.Y. App. 1999). A non-compete agreement flowing from a valid employment relationship is reasonable when the non-compete agreement (1) is no greater than is required to protect a legitimate business interest of the employer; (2) does not impose an undue hardship on the employee; and (3) does not harm the public. Fisher/Unitech at *3, citing BDO Seidmen at 1223. See also, Restatement (Second) of Contracts, § 187 cmt. b, § 188(1) and cmts. a, b and c (1981). These three requirements are what Illinois courts commonly refer to as the "three dimensional rule of reason" which is necessary in order to establish an employer's legitimate business interest in a non-compete agreement. Id. at *3-4.

When deciding the reasonableness of a non-compete agreement, Illinois courts consider "several factors and sub-factors within the component of the [employer's] legitimate business interest." Reliable Fire Equipment, 965 N.E.2d at 403. These factors, however, should not receive too much weight, but instead serve only as "nonconclusive aids" used in determining an employer's legitimate business interest. Id. In Reliable Fire Equipment, the Illinois Supreme Court considered such factors as the extent of customer relationships, whether the employee acquired confidential business information, and the scope and duration of the non-compete. Id. at 403. Two other points, however, are important to remember regarding the relevant factors. First, the factors considered by the court in Reliable Fire are just some of the factors a court may consider in determining the reasonableness of a non-compete agreement. Next, no one factor carries more weight that the other. Instead, the importance of a particular factor depends on the facts and circumstances of each individual case. Id.

Comparisons and Contrasts Between Florida and Illinois Law

Florida and Illinois law on non-competes is similar in several respects. For example, both require a party enforcing a non-compete agreement to prove the existence of one or more legitimate business interests. See Fla. Stat. § 542.335(1)(b). Furthermore, Florida and Illinois also require non-compete agreements be reasonable in time, area and line of business. See Fla. Stat. 542.335(1). Both states use a "reasonableness" approach to deciding the existence of a legitimate business interest.

The most noticeable distinction between Florida and Illinois law concerns the statutory versus common law frameworks. Florida has codified its non-compete laws pursuant to Fla. Stat. § 542.335. In contrast, Illinois relies on over a century of common law. Either way, both states seek to protect "legitimate" business interests of the employer or party enforcing the non-compete agreement. No exact formula decides the outcome of a case. Instead, courts in both states look to such issues as the existence of confidential information or the extent of the customer relationship that is at stake.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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