The width of the Mississippi River is 1,880 feet as it glides past The Gateway Arch, forming a watery boundary between Missouri and Illinois.
These states are also separated in their approach for the legal requirements of a non-compete agreement between an employer and employee. In this legal version of the Busch Braggin’ Rights basketball game between Mizzou and the Illini, there are two distinct approaches.
Like any contractual obligation, a non-compete agreement requires the support of adequate “consideration.” Under Missouri law, a valuable consideration may consist of some right, interest, profit or benefit accruing to one party, or some forbearance, loss or responsibility given, suffered or undertaken by the other.
Missouri courts have recognized that continued at-will employment constitutes consideration for a non-compete agreement where the employer allows the employee “by virtue of the employment to have continued access to its protectable assets (such as trade secrets) and relationships.”
In the Land of Lincoln, Illinois courts have general held that an employee must remain employed for a “substantial period of time” following the signing of a restrictive covenant (a non-compete agreement) before a court will find that covenant supported by sufficient consideration.
Generally, Illinois state courts have held that continued employment for two years or more constitutes adequate consideration. The reasoning is that an employer should not be able to prevent its competitors from hiring a valuable employee by hiring that employee itself, locking him or her into a restrictive covenant, and then firing him or her soon thereafter, leaving that employee unable to work for either that employer or its competitor. (Some Illinois federal courts disagree with the two-year requirement.)
The Balancing Test
Missouri courts have not adopted a legal guideline such as the two-year mark generally upheld by Illinois Courts. The law of non-compete agreements in Missouri seeks to balance the competing concerns between an employer and employee in the workforce. On one hand, employers have a legitimate interest in engaging a highly trained workforce without the risk of losing customers and business secrets after an employee leaves his or her employment. On the other hand, employees have a legitimate interest in having mobility between employers to provide for their families and advance their careers. Furthermore, although the law favors the ability of parties to contract freely, contracts in restraint of trade are unlawful.
The Illinois Supreme Court has ruled that to be considered “reasonable,” the restrictive covenant must satisfy a three-part test that requires the covenant to be: 1) no greater than is necessary to protect a legitimate business interest of the employer; 2) without undue hardship on the employee; and 3) without injurious effect to the public.