Trade Secrets & Employee Mobility

From the mid-1970s until a few weeks ago, Illinois law on enforceability of restrictive covenants was clear: employers seeking to enforce a restrictive covenant first had to establish that the covenant was necessary to protect either confidential information or a near permanent customer relationship - the two recognized "legitimate business interests" sufficient to support a restrictive covenant under Illinois law.

In late September 2009, the Illinois Fourth District Court of Appeal, in Sunbelt Rentals, Inc. v. Ehlers, determined that the "legitimate business interest" test was not supported by any decision of the Illinois Supreme Court. Accordingly, the Sunbelt court held that, in determining whether a restrictive covenant is enforceable under Illinois law, a court should evaluate only the time-and-territory restrictions contained therein. In doing so, the Fourth District Court of Appeals departed from the clearly established case law of all appellate courts in Illinois (and also previous decisions of the Fourth District).