Is the tide turning in New York and Illinois against employee non-compete agreements? This Wall Street Journal article only refers to violations of “New York labor laws” as the focus of the New York Attorney General’s investigation of Law 360’s threat to enforce a non-compete against a former reporter. Since New York contract law permits “reasonable” employee non-compete agreements, it is unclear what laws might have been violated.
The article also says that the Jimmy John’s sandwich shop chain has been sued by the Illinois Attorney General for “highly restrictive” non-compete agreements that are “illegal and unenforceable under Illinois law.” Illinois contract law also permits “reasonable” non-competes.
The “reasonableness” of an employee non-compete agreement is usually determined by a judge on a case-by-case basis. Perhaps the growing economic and political criticism of non-competes, however, is moving employers to drop them before they face more drastic legislative reforms.
Law360 will stop requiring new hires to sign noncompete agreements under a settlement between the legal publication and New York authorities, which fired a warning shot at companies that include such clauses in their employment contracts.