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IL business lawyerBeing laid off or fired is disappointing and may even be confusing - Was it something that you did? Was it something that you did not do? Especially in cases when an employee has done nothing wrong, employers often opt to have the employee sign a severance agreement before they sever ties. A severance agreement is a legal contract that employers use to maintain some sort of post-employment control and to prevent the employee from suing. Because Illinois is an at-will state - meaning as an employer, you can fire an employee at any time, and an employee can quit at any time - severance agreements are most commonly used when a contract was signed prior to employment. Before you give the agreement to your employee, you should have an experienced attorney look over the contract and pay special attention to specific clauses.

Severance Pay or Money the Employer Owes

Sometimes, due to an existing employment contract or company policy, your employee is already entitled to severance pay, so a clause included in the severance agreement is not necessary. If you owe your employee any money, such as for unreimbursed job expenses, it should be noted in the agreement, along with a date by which you will pay.

Employee Benefits

Your agreement should outline which benefits your employee is entitled to following termination, like medical benefits or stock options. Your employee has the option to stay on health insurance through your company’s insurer for up to 18 months after termination, thanks to the Consolidated Omnibus Budget Reconciliation Act of 1995 (COBRA). You should also include who is responsible for insurance premiums if the employee does choose to remain on the company’s health insurance plan.

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non-compete, Wheaton business lawyersWhen an individual purchases a business, they are not only buying the physical assets associated with that business. They are also taking ownership of more abstract assets like the existing customer base, the name and reputation of the business, and intellectual property. Understandably, someone who buys a business wants to ensure that the value of these intangible assets is not reduced because the original owner of the business is opening a competing business in the same market. This is just one of many situations in which a non-compete agreement can be beneficial.

How Does a Non-Compete Agreement Work?

Put simply, a non-compete agreement is a legally binding contract involving a promise not to enter into business competition of some kind. Non-competition clauses are most often used to prevent an employee from working for a competitor or starting a business that competes with his or her employer’s business. These agreements can also include a provision prohibiting the employee from disclosing proprietary information to other parties. Covenants not to compete are often also required of business consultants and contractors.

Non-Compete Agreements Must Meet Certain Criteria to be Enforceable

Of course, a non-competition agreement cannot simply instruct an employee to never again work in a certain field. The scope and duration of a non-compete must be reasonable for the contract to be valid. Illinois courts have ruled that non-compete agreements are only valid if certain criteria is met. It is advised that any business utilizing a non-compete in Illinois provides employees with continuous employment for at least two years as well as additional consideration in the form of perks like bonuses or higher compensation.

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non-compete, DuPage County contract lawyersIn today’s highly competitive world, many employers insist that their employees sign non-compete agreements or NCAs. Also called non-competition agreements, these documents are especially popular for employers who hire workers with unique abilities or specific talents. In general, employers have the right to attempt to limit the impact to their brand caused by an employee leaving, but a non-compete agreement could be declared unenforceable if an employer overreaches. Put simply, NCAs can help protect your company, but they must be used properly.

The Basics of Contract Law

If you intend to have your employees sign an NCA, you probably expect the document to be a valid contract. This means that the NCA must meet the requirements of any other contract. Under Illinois law, these requirements are an offer, acceptance, and consideration for both parties. Basically, both sides must reach an agreement to exchange something for another thing—in most cases, the trade is a form of payment in exchange for goods or services. “Consideration” refers to what each party receives. For example, a purchase at a grocery store is essentially a simple contract. The store offer eggs for sale at a specific price—the “terms” of the contract. By handing over your money, you accept those terms. The store receives your money as the consideration, and you receive the eggs as your consideration.

In the past, the consideration offered in exchange for signing a non-compete agreement was the continuation of employment. Essentially, “sign this and you will be allowed to work here.” Unfortunately, this led to employers hiring certain employees for a very short period of time, requiring them to sign NCAs, then terminating them, leaving them without the ability to find work in their field. In 2013, Illinois courts determined that such practices were unethical, and two years of continued employment was found to be sufficient consideration.

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Illinois small business lawyerWhile most small businesses are only interested in making ends meet, there are large corporations and franchises out there, trying to take advantage of blue-collar workers. Sadly, when employees are paid low wages and asked to fill out a non-compete agreement, they may find themselves stuck, with no way out.

That is why Illinois now has a law on non-compete agreements; two companies have been sued in the past year for violating it. Learn more about this law and what it could mean for your company, and discover how an experienced business law attorney can help you avoid legal problems over improper use of non-compete agreements.

Understanding the Purpose of a Non-Compete Agreement

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Wheaton IL business law attorneysNon-compete agreements, which prohibit employees from engaging in certain acts with their employer's competitors, are going to see some important changes, come 2017. If you are a business owner in Illinois, it is critical that you know what these changes are, how they could affect your business, and what you can do to protect yourself if you should face an issue involving a non-compete agreement. The following information can help.

Illinois Freedom to Work Act

Set to take effect January 1, 2017, the Illinois Freedom to Work act stems from a lawsuit brought against an Illinois sandwich shop food chain by the state's Attorney General. Workers were required to sign a non-compete agreement that restricted them from working with another sandwich shop (or restaurants that served like products) for the duration of their employment and at least two years after. The concern was that these employees, who were generally paid minimum wage, could not reasonably support their families with the restrictions that were imposed by the non-compete agreement.

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