A Lower Level of Scrutiny? New Alternatives for an Effective Restraint on Competitive Activity

For decades, courts in Illinois and all over the country have struggled with the enforcement of contractual terms that forbid an employee from competing with a former employer.Courts must weigh an employer's right to protect its interests against the employee's ability to earn a livelihood.This analysis often leads to unpredictable results and makes it difficult for employers to predict whether particular contractual restrictions will be enforced by a reviewing court. 1 Despite this uncertainty, there are measures that employers can take to make results more predictable.For example, several decisions have embraced the idea of "forfeiture-for-competition" clauses that condition an employee's receipt of certain benefits on that employee's promise not to compete with the former employer.If the employee competes, he or she will not be entitled to the benefit.Importantly, these forfeiturefor-competition clauses have been subjected to a lower level of scrutiny than traditional non-competition clauses.Additionally, recent decisions suggest that courts are more likely to enforce a restriction provision where the company alleviates the effect of the former employee's "loss of livelihood" by paying the former employee during the non-compete period.These developments suggest that courts may be willing to enforce an arrangement that has developed in the United Kingdom, termed "garden * Mr. Raker is an in-house attorney for Argonne National Laboratory specializing in labor and employment issues.He would particularly like to thank Sean Nash of Winston & Strawn LLP for his contributions to this article.1. See Greg T. Lembrich, Note, Garden Leave: A Possible Solution to the Uncertain Enforceability of Restrictive Employment Covenants, 102 COLUM.L. REV.2291, 2291 (2002) ("Restrictions such as non-competition and non-solicitation agreements have long been present in many American employment contracts.Courts, however, have historically been skeptical of such provisions and often refused to issue injunctions to enforce them.The resulting uncertainty has proven to be a major problem for employers in many industries, who are left with no reliable means of keeping their key employees from joining a competitor or competing themselves.").