Friday, August 17, 2012
Physicians and Non-Compete Agreements in Illinois
PHYSICIANS AND ENFORCEABILITY OF NON-COMPETE AGREEMENTS Physicians should think twice before signing a non-compete agreement Just recently in December of 2011, the Illinois Supreme Court broadened the enforceability of non-compete agreements. Prior to the ruling, courts have struggled with the enforceability of non-compete agreements which left both employers and employees weary in these tough economic times. Back in 2009, the 4th District Court of Appeals steered away from a long line of cases requiring that non-compete agreements must protect a legitimate business interest. The Appellate court held that for a non-compete agreement to be enforceable, all that employers had to show was that the non-compete agreement be reasonable in its duration and geographic restrictions. After the 4th District Court of Appeals ruling, it seemed that employers had the upper hand but the legal uncertainty as to whether a non-compete agreement must protect a legitimate business interest left judges struggling to reconcile long established precedent with the new decision. The struggle came to an end when the Illinois Supreme Court came down with its decision holding that there must be a protectable business interest in order for a non-compete agreement to be enforceable, but did it really clarify what types of non-compete agreements are or not enforceable? The Illinois Supreme Court went on further to state that whether a non-compete agreement protected a legitimate business interest should be decided on a totality of the circumstances test. So what does this mean? It means that until future cases establish what types of business interests are protectable, employers, employees and judges will continue to struggle with whether a certain non-compete agreement will be enforceable. Will a business’ reputation or goodwill be a protectable interest? Until such decisions are made by the courts, employees should be especially weary on signing such agreements, especially professionals such as physicians. In the context of non-compete agreements, in some cases physicians are treated the same as any other employee on the issue of enforceability. Although the appellate courts have been split on the enforceability of non-compete agreements against physicians, the Illinois Supreme Court has held that they are in fact enforceable against medical professionals. In Mohanty v. St. John Heart Clinic, S.C., the plaintiff-physicians sought a declaratory judgment that the non-compete agreement at issue, which restricted the “practice of medicine”, was void based on public policy grounds. The Supreme Court rejected other appellate court rulings which held that such non-compete agreements against physicians violated public policy. The plaintiffs’ also argued that the activity restriction, the “practice of medicine”, was broader than necessary to protect the defendants’ interests, which was cardiology. The court upheld the non-compete agreement holding that the activity restriction was not broader than necessary since the geographic restriction was within a narrowly circumscribed area of a large metropolitan area. Physicians contemplating on whether to sign a non-compete agreement should be cautious before entering into such an agreement not only because of the uncertainty of enforceability but also because of the costs of litigating such an issue. Physicians who are uncertain as to whether signing a non-compete agreement is in their best interest should have an attorney review the agreement to protect themselves from the possibility of costly litigation in the future. Andrew McCann is an Associate for the Robertson Law Group, LLC in the North Aurora, Illinois location in the Western Suburbs of Chicago, Illinois. Andrew McCann concentrates in family law, asset protection, and business law for Physicians, Dentists, and Healthcare Providers. Andrew McCann may be reached at 630-800-2033 or Andy@RobertsonLawGroup.com. Robertson Law Group, LLC has offices in North Aurora and Downtown Chicago, Illinois. The downtown Chicago Office may be reached at 312-85-7102. Our website is www.RobertsonLawGroup.com.