Geographic Limitation

Non-compete agreements frequently include a geographical limitation, but a restrictive covenant without a geographic limitation will almost never be enforceable. Some non-compete agreements will define the geographic limitation by a radius around the company's headquarters. Others may limit the non-compete agreement to specific cities or states in which the employer does business. Whether or not the geographic limitation is reasonable depends largely on facts unique to each employer such as the goods or services provided, the size of the business, the amount of business the employer does in the restricted area, and the type and number of customers located within the restricted area. Our Chicago non-compete agreement negotiation lawyers can help craft an agreement with a geographic limitation that is likely to be reasonable.

These unique facts will be taken into consideration when a court decides if the geographic restriction is reasonable or not. For example, in Reliable Fire Equipment Company v. Arredondo, 2011 IL 111871, the non-compete agreement at issue prohibited employees from working for a competitor anywhere in Illinois, Indiana, or Wisconsin. The lower courts had determined that the geographic limitation was not reasonable. The Illinois Supreme Court, however, overruled them finding that the large geographic limitation was reasonable to protect the employer’s legitimate business interests. In its decision, the Illinois Supreme Court noted that, the question of whether the restrictive covenant would ultimately be enforceable would have to be made considering the “totality of circumstances” of which the geographic limitation was only one factor.

In the case of Callahan v. L.G. Balfour, 534 N.E.2d 565 (Ill.App. 1989), however, an Illinois appellate court found that a geographic limitation of Chicago and seven surrounding counties in a covenant not to compete was too large to be reasonable. In making this determination, the court stressed that such a restriction imposed an undue hardship on the employee who had thirty years in the industry and would have to relocate to comply with, non-compete agreement. These two cases demonstrate that even courts within the same state can come to different conclusions regarding the reasonableness of a geographic limitation in a non-compete agreement. Our non-compete agreement negotiation attorneys can assist Chicago clients with navigating this complicated area of the law.

Each state has its own standards regarding what a reasonable geographic limitation is and there may even be different standards within different courts in the same state. For this reason, it is crucial to have an attorney familiar with the standards of your local court review any restrictive covenants before you enter them. It is equally important to have an attorney familiar with the standards of the court that will determine the enforceability of a restrictive covenant.

That’s where the Chicago non-compete agreement negotiation attorneys at Lubin Austermuehle, P.C. can help. Our attorneys have decades of experience negotiating and litigating non-compete agreements and other restrictive covenants. Conveniently located in Chicago and Oak Brook, IL, we have a wealth of knowledge regarding the various standards applied by the courts in DuPage, Cook, and the surrounding counties and the constant changes to those standards. Whether you are looking to negotiate a non-compete agreement or are being accused of violating one, a skilled non-compete agreement negotiation lawyer in the Chicago area is needed. You can contact us online today or call us at 630-333-0333.