CHICAGO — A Chicago federal judge has struck down a non-compete clause because it was too broad to enforce, and an employment attorney in Chicago says the decision should catch the eye of companies and employees alike.
The case revolved around Daniel Dumrauf, who sued his former employer, Medix Staffing Solutions Inc., after the company attempted to enforce a non-compete agreement that barred him from working for any other competing firm within 50 miles of its Phoenix office.
Dumrauf, a former director of the company, worked mostly in Ohio and Kentucky, but his new employer had an office in Scottsdale, Ariz., which was within 50 miles. Medix is a Chicago-headquartered staffing company.
U.S. District Judge Sarah Ellis found the language in the non-compete was so broad it couldn’t be enforced.
"The court refused to enforce Medix’s non-compete because the scope of activity it sought to limit was too broad," said Mark Saloman, an attorney at Chicago law firm Ford Harrison, discussing the case with The Cook County Record. "By simply stating the employee could not work in any business that competes with Medix, the non-compete as written prevented the employee from working for any competitor - even if his role with the new company was completely different from his former role."
Saloman said Illinois employees can look to this decision for relief if they have signed a similar non-compete agreement. Additionally, employers should keep the decision in mind when issuing new agreements.
"Whether they are drafting new agreements or revising old ones, Illinois employers must use caution to avoid the urge to roll out draconian restrictive covenants,” Saloman said. "The temporal duration, geographic area and - most importantly - the scope and purpose of the non-compete agreement must be reasonable under the circumstances and narrowly tailored to protect each company’s specific business interests."
Saloman said Illinois courts have been pushing back on restrictive covenants for several years. This case is one of several high-profile decisions that have continued this trend, he added.
He advised employers to take a look at any existing non-compete agreements.
“Review your existing non-compete agreement to make sure it is crafted with precision to protect the business, considers the work the employee actually performed for the business during [his or her] employment and is not patently unfair to the employee so as to be a restraint of trade,” Saloman said.