It is fairly common for companies to include a non-compete clause in their employee documents, which generally prohibits individuals from competing against the company during the course of their employment. However, this does not prevent some employees from violating these covenants not to compete. The recent Illinois Supreme Court case of Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871, clarifies the legal analysis regarding violations of non-compete clauses.
Reliable Fire Equipment is an Illinois company that sells, installs, and services fire prevention and alarm systems. The defendant, Rene Garcia, began working for Reliable in 1992, at which time he signed a covenant not to compete as part of his employee agreement. The co-defendant, Arnold Arredondo, signed a similar agreement when he began working for Reliable in 1998. Under this agreement, both employees agreed not to compete with Reliable both for the duration of their employment and one year following their termination. The covenant further specified that employees were specifically prohibited from competing in Illinois and the surrounding bordering states of Indiana and Wisconsin.
The business litigation issue in Reliable arose under claims that both defendants violated this agreement during the course of their employment. While still working for Reliable, Arrendondo founded High Rise Security Systems, LLC, a company dedicated to selling fire alarm systems in the Chicagoland area. Soon thereafter, Garcia signed an operating agreement with High Rise; he was also still employed by Reliable.
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