Synopsis: Illinois Appellate Court confirms non-solicit and non-compete agreements continue to need adequate legal consideration or extended employment to be enforceable. DO IT RIGHT OR GET NO BENEFIT WHEN YOUR STAR EMPLOYEE LEAVES. Analysis by Shawn R. Biery, J.D., MSCC.
Editor’s comment: The Illinois courts have upheld non-compete and non-solicitation agreements for a variety of reasons. However, the scope is generally narrow and there are many pitfalls which can render your “agreement” to be found partially or completely null if you don’t meet the elements necessary for enforcement. Recently in Fifield & Enterprise Financial Group, Inc. v. Premier Dealer Services, Inc. 2013 IL App (1st) 120327, available at here, the Appellate Court indicated Illinois companies cannot require newly hired workers to sign a non-compete agreement with no consideration and expect it to be enforceable if the employee leaves within two years for any reason (or no reason at all). The unanimous June 24, 2013 decision appears to have affirmed what was considered conventional wisdom about non-competes. We have routinely advised clients to provide some form of separate consideration for non-compete agreements. In Fifield, had the employer provided some form of consideration, the courts may have enforced the agreement.
The case at hand involved an appeal from a Circuit Court of Cook County dismissal of non-solicitation and non-competition clauses in Fifield’s employment agreement. Prior to October 2009, Fifield was employed by Great American Insurance Company (GA). As an employee of GA, Fifield was assigned to work exclusively for Premier Dealership Services (PDS), a subsidiary which marketed finance and insurance products to the automotive industry. PDS was sold to Premier in 2009 and Premier made an offer to continue employment if Fifield signed an employment agreement which included non-solicitation and non-competition provisions for two years past any termination of employment. Fifield even negotiated the agreement to void if terminated without cause in the first year of employment. He then resigned In February 2010 and in March 2010, along with his new employer, filed for injunctive relief. After a counterclaim was also filed by Premier, the trial court addressed the non-solicit and non-compete portions by declaring them unenforceable due to lack of adequate consideration.
Regardless of any personal feelings with respect to non-solicit/non-compete agreements, Illinois maintains one of the more employee-friendly venues for these types of agreements and employers should take heart when attempting to achieve and enforce such agreements. This reviewing court has made it very clear (as they had in the past cases cited in the decision) that two years of employment or some other consideration for the agreement to be enforced. We note this is particularly of importance in the insurance industry because so many companies and brokerages use non-solicit/non-compete requirements to hamstring their employees from performing even routine services after leaving.
The twist in this case is that prior cases generally dealt with an employee already having the job and having been employed at least two years so they were deemed to have received adequate compensation for entering into a non-compete agreement. This case clarifies the same standard should apply to a newly hired worker and makes it very clear two years of employment or some other adequate consideration is at the minimum necessary to successfully enforce these types of agreements. Following this ruling, one might assume unhappy workers will not stay more than two years to render non-solicit and non-compete agreements worthless.
The case is still eligible for possible appeal to the Supreme Court. However, we have some doubts the Supreme Court in Illinois will change the decision based upon the facts of this case. In the end, make sure there is some adequate consideration (such as a signing bonus, a prior agreed severance payment, a year-end bonus or some other actual specific value) if you want to enforce these types of agreements. This article was researched and written by Shawn R. Biery J.D., MSCC and he is available at firstname.lastname@example.org or 312-756-3701 for any questions or to review and advise on these types of agreements or any other Employment or WC issues employers may be dealing with in Illinois.
Synopsis: Federal 7th Circuit Court of Appeals clarifies use of the “15-year presumption” in “change of condition” Black Lung coal miner claims. Analysis by James F. Egan, J.D.
Editor’s comment: The 7th Circuit Court of Appeals issued a ruling holding a claimant can use the “15-year presumption” in proving change of condition in Black Lung claims. In Consolidation Coal v. OWCP and George Bailey No. 11-3, the 7th Circuit Court of Appeals held an ALJ could apply the presumption to change of conditions claims and an ALJ is not required to address insignificant rebuttal evidence. The ruling is online at:
In 1972 the Black Lung Benefits Act was enacted as an amendment to the Health and Safety Act to compensate coal miners who were totally disabled due to pneumoconiosis. The Act contained a provision creating a rebuttable presumption that a coal miner who had worked for at least 15 years in underground mines or surface mines with similar conditions and who suffered from a totally disabling respiratory or pulmonary impairment were totally disabled due to pneumoconiosis. In 1981 the presumption was removed for new claims, but then revived in 2010 for claims filed after January 1, 2005 which were still pending on or after March 23, 2010.
Claimant George Bailey (no, this Claimant is not Jimmy Stewart) was employed by Consolidation Coal for 26 years, primarily operating bulldozers to load coal in dusty conditions. He did smoke several cigarettes per day for year, however; the actual pack years was disputed at hearing. Claimant had been diagnosed with COPD and was seeking benefits under the BLB Act. In order to be awarded benefits, the claimant would have to satisfy four elements: 1) that he suffers from pneumoconiosis; 2) that pneumoconiosis was caused by coal mine employment; 3) that he was totally disabled by a pulmonary or respiratory impairment; and 4) the impairment was caused, at least in part, by pneumoconiosis. The claimant had filed three prior claims for black lung benefits when the 15-year presumption was no longer part of the Act. The first two were denied and the third was withdrawn.
The claim in question was filed in 2007 and three doctors agreed he was totally disabled by COPD. Because he had filed prior claims which were rejected, claimant was required to show a change in condition in this claim. The ALJ, using the 15-year presumption held Bailey could establish pneumoconiosis, caused in part by exposure to coal dust, both elements missing in his prior claims. In his analysis of the claim the ALJ awarded benefits for total pulmonary impairment applying the 15-year presumption. The ALJ discussed in his decision the claimant’s medical and work histories, as well as his cigarette smoking, finding Bailey’s working conditions were substantially similar to conditions in an underground mine. In its decision the ALJ did not consider if Consolidation had rebutted the presumption in the analysis.
Consolidation appealed arguing the presumption was incorrectly applied in using the 15-year presumption and the ALJ should have discussed the employer’s evidence which involved expert testimony regarding claimant’s cigarette smoking.
On appeal, the 7th Circuit first held the ALJ could apply the presumption stating the relevant statutory language and case law contained no language suggesting the presumption should not be applied to change in condition cases.
The second issue was summarily dismissed by the Court, with the Court holding the failure of the ALJ to discuss rebuttal evidence in the initial decision was at best harmless error as the 15-year presumption is very difficult to rebut and Consolidation had produced no significant evidence on the records to undermine the claim. It should be noted Consolidation’s expert did not state that a non-work-related condition caused Bailey’s lung condition and Consolidation’s defense asserting claimant smoked more than he testified to was insufficient to rebut the presumption.
Jim Egan, J.D. researched and wrote this analysis. Please feel free to contact Jim about BLB defense along with Longshore Harbor Workers’ Comp defense issues. He can be reached at email@example.com.
Synopsis: Is your defense lawyer properly advising you of the new IL WC traveling employee situation?
Editor’s comment: Right now, we have a strange situation in the IL WC system where our Appellate Court, Workers’ Comp Division has redefined the concept of “arising out of and in the course of employment” for several million workers. The reviewing court has designated anyone who doesn’t work “on the premises” of their employer to be a “traveling employee.” They have expanded coverage for such workers to provide global WC coverage from the point the worker leaves their home and starts the trip to work until the worker returns to their home at the end of the day. The IL Appellate Court has further indicated such workers are covered for any fall-down, any “risk of the street” or any negligent action or activity so long as the action causing injury is “reasonable and foreseeable.” In our view, almost everything a human does is “reasonable and foreseeable.”
What we have been advised is very few defense firms are reporting this new WC legal concept to their clients. It seems they are almost in denial on the topic. In our view, they may be committing malpractice not to let you know the risks you are facing. Please also note the three IL Appellate rulings uniformly outline coverage is provided “as a matter of law.” This means if you controvert the claim, you are facing penalties and fees to do so.
We all hope the IL Supreme Court is going to reverse the Appellate Court’s ruling and IL WC will return to its normal version of sanity. Until the issue is addressed by our highest court, we will all have to wait and see what happens at the IWCC.
Arik D. Hetue, J.D. of our office drafted this new language we are adding to our opening reviews:
1.At present we have been maintaining denial of Petitioner’s claim based on the fact the accident did not occur “in the course of their employment.” Under the recent Venture-Newberg et. al. decision, we need to confirm whether Petitioner falls into the newly expanded “traveling employee” definition in order to continue this line of defense. As such, please confirm whether:
· Petitioner works elsewhere than the premises of Respondent;
· Petitioner works in multiple locations for Respondent;
· Petitioner is required to leave that situs in the course of their duties;
· Petitioner works from home, even in limited circumstances;
· Petitioner is required to drive as a part of their position.
If any of these points are applicable to Petitioner’s position, the new standard will apply, and we caution penalty/fee exposure could be present in this matter if benefits are being denied due to accident denial under the former standard. Please advise as soon as possible in order to confirm any potential penalty exposure.
If you have questions or concerns, please send a reply or contact Arik Hetue, J.D. directly at firstname.lastname@example.org. Please feel free to post comments on our award-winning blog.
Synopsis: Good bye and God Bless, William Ford Keefe.
Editor’s comment: William Ford “Bill” Keefe passed away peacefully on July 12, 2013. Bill Keefe was born June 2, 1921. He was a graduate of St. Ignatius High School and Loyola University in Chicago. In 1941-42, Keefe worked as a summer laborer in the Carnegie-Illinois Steel Corporation's South Works while studying for a law degree. He was called to service with the U. S. Army in 1943 and served until 1954. He was one of the first U.S. servicemen to enter Berlin after the suicide of the despot, petty thief and drug-addict Adolf Hitler in late April 1945. Bill Keefe was one of three Keefe brothers who fought in WWII, including Andrew J. Keefe, who was KIFA (or Killed in a Flight Accident) and Walter S. Keefe who fought the entire war from island to island across the Pacific Theater of Operations.
Bill Keefe worked as a free-lance writer in Spain and the United States after his military service. After returning to Chicago in 1961, he was an encyclopedia editor and communications consultant until 1967, when he founded his own organization, the Action Research Institute. At the Institute, he specialized in industrial consulting, writing and research. Bill Keefe was a journalist, a freelance writer and an author of 25 books, one of which he co-authored with your editor.
A Mass of Christian burial will take place this Tuesday, July 16 at 11 a.m., at St. Mary of the Lake Church in New Buffalo, MI with Father Craig Lusk officiating. Burial will follow in Pine Grove Cemetery, New Buffalo. Visitation is Monday, July 15 from 6 to 9 p.m. at Sommerfeld Chapel, 15 N. Barton St., New Buffalo. Memorial contributions may be made to the donor’s choice. Friends wishing to leave a message of condolence for the family can do so at www.sommerfeldchapel.com.
Synopsis: KCBA welcomes general liability, employment law and litigation defense specialist Chris St. Peter from the law firm of Winston & Strawn LLP??
Editor’s comment: Keefe, Campbell, Biery & Associates proudly announce the addition of Christopher H. St. Peter, J.D. to our legal team. Chris joins us from Winston & Strawn LLP, where his practice involved all aspects of complex commercial litigation in state and federal court. Chris graduated with honors from Chicago-Kent College of Law, where he was an executive articles editor of the Chicago-Kent Law Review and an extern for the Honorable Magistrate Judge Arlander Keys in the U.S. District Court, Northern District of Illinois. Chris will focus his practice on a full range of defense work, including general liability, employment law, product liability, and contract disputes. Chris can be contacted at any time at (773) 301-7244 or email@example.com.?