The Bonus Forfeiture:
The courts of Illinois have generally disfavored non-compete provisions in Illinois employment contracts. An employer who seeks to enforce a competition restriction that precludes a former employee from engaging in competitive activities must demonstrate the reasonableness of the restriction. In order to be enforceable, the courts of Illinois have repeatedly required that the restrictions be very narrow and not prevent the former employee from working in his/her area of expertise and otherwise endanger the employee’s ability to earn a livelihood.
Non-Compete Provisions are particularly difficult to enforce where they were imposed upon an existing employee as the employer is generally required to show special consideration passing from the employer to the employee to support the added contract provision.
However, a recent decision by the Seventh Circuit Court of Appeals, the federal appellate court that includes the state of Illinois as well as parts of neighboring states, has held that the Illinois Supreme Court “would” enforce a “bonus forfeiture” provision. For example, if an employee could earn additional compensation based upon his or her having met specified performance goals, the payment of which is conditioned upon the employee’s continued employment, or which requires repayment if the employee voluntarily leaves the employer to work for a competitor, the Seventh Circuit believes that such a clause would be enforceable in Illinois since it does not prevent the employee from earning a livelihood.
The Court of Appeals was required to make a determination of what the Illinois courts would do since there has been no precedent set in Illinois on such a provision.