Employee Restrictive Covenant Agreement
Cover Terms
The terms below are incorporated into and form part of this agreement.
| Employer | [Legal name of the entity that employs the employee] | ||||||||
| Employee | [Full legal name of the employee] | ||||||||
| Employee Title / Position | |||||||||
| Effective Date | [Effective date of this agreement — the date the last party signs. It anchors the duration presumptions stated in Cover Terms.] | ||||||||
| Governing Law | Illinois | ||||||||
| Confidentiality | |||||||||
| Trade Secrets Duration | Perpetual | ||||||||
| Other Confidential Information Duration | 24 months | ||||||||
| Employee Non-Solicitation | |||||||||
| Duration | 24 monthsMarket benchmark HideShow
Why this selected default?Why is this the selected default?24 months matches the modal employee non-solicit term observed in benchmarked, publicly-filed employee agreements; 12 months is the common lighter alternative. The Act sets no express duration presumption for the no-hire category, so the uniquely-essential scope limit does the primary category work; counsel should size the term to the workforce interest actually protected. Showing 3 representative examples. Company names link directly to the underlying SEC filing.
Showing 3 representative examples. Company names link directly to the underlying SEC filing.
Showing 3 representative examples. Company names link directly to the underlying SEC filing.
Showing 3 representative examples. Company names link directly to the underlying SEC filing. See all 3 examples in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark → | ||||||||
| Customer Non-Solicitation | |||||||||
| Duration | 12 monthsState-law basis 12 monthsReference only — not part of this agreement. 12 months sits well inside the presumptively reasonable window for a current-customer non-solicit: eighteen months, or for as long as post-separation consideration is paid, whichever is greater. Counsel may extend toward eighteen months, or longer while post-separation consideration is paid, where the interest supports it. | ||||||||
| No Business with Covered Customers | |||||||||
| Duration | 12 monthsState-law basis 12 monthsReference only — not part of this agreement. 12 months sits within the current-customer window. Because non-dealing has no category of its own, it is drawn to fit inside the current-customer non-solicit exception, and its duration tracks that category's presumption. | ||||||||
| Non-Investment | |||||||||
| Duration | 12 months | ||||||||
| Non-Disparagement | |||||||||
| Duration | 24 months |
Standard Terms
1. Defined Terms
“Competitive Business” means the business activities described in Cover Terms under Competitive Business.
“Confidential Information” means non-public information relating to Employer's business, including trade secrets, customer lists, pricing, business processes, technical data, and strategic plans, but excluding information that becomes public through no fault of Employee.
“Covered Customers” means customers, vendors, referral sources, and business partners with whom Employee had material contact or for whom Employee had responsibility during the 12 months before termination of employment.
“Covered Employees” means employees with whom Employee worked or whom Employee managed during the 12 months before termination of employment.
“Passive Public Holdings” means ownership of securities of a publicly traded company representing less than five percent of any class of such company's securities, and interests in diversified mutual funds, index funds, and exchange-traded funds that may hold securities of a Competitive Business.
“Protected Interests” means Employer's Confidential Information and trade secrets, near-permanent relationships with customers, patients, and referral sources, workforce stability, and goodwill.
“Restricted Period” means the duration specified in Cover Terms for each covenant, beginning on the date Employee's employment with Employer ends for any reason.
“Restricted Territory” means the geographic area described in Cover Terms under Restricted Territory.
“Solicit” means to directly or indirectly contact, approach, induce, encourage, or provide Confidential Information to any person or entity for the purpose of diverting business away from Employer, but does not include responding to general advertisements or unsolicited inquiries not initiated by Employee.
“Trade Secrets” has the meaning given in the Illinois Trade Secrets Act, 765 ILCS 1065/2(d).
2. Recitals and Protected Interests
Employer and Employee acknowledge that each restrictive covenant in this agreement is ancillary to a valid employment relationship and protects one or more Protected Interests of Employer. Employer would not provide Employee with access to these Protected Interests absent the protections in this agreement.
3. Timing, Consideration, and Right to Consult Counsel
Employer has advised Employee, in writing, to consult with an attorney before entering into this agreement, and has either provided Employee with a copy of this agreement at least 14 calendar days before the commencement of Employee's employment or given Employee at least 14 calendar days to review it before signing. Employee may choose to sign before the 14-day period expires, but Employer has extended the full period. The parties agree that this agreement is supported by adequate consideration — either at least two years of employment after Employee signs this agreement, or the compensation, access to Confidential Information, and other benefits Employer provides to Employee under this agreement, which the parties agree are given in exchange for the restrictive covenants — given specifically in exchange for the restrictive covenants in this agreement. Employee acknowledges that the restrictions in this agreement are reasonable and necessary to protect Employer's Protected Interests. This agreement is effective as of the Effective Date listed in Cover Terms.
Drafting Note Consideration tied to the covenant
An Illinois covenant supported by a benefit rather than two years of employment stands only where the covenant document itself identifies that benefit — a bonus, equity grant, or other professional or financial benefit — as given in exchange for the restraint. In Midwest Lending Corp. v. Horton, a signing bonus mentioned only in an offer letter did not support a later, integrated nonsolicitation agreement that never identified the bonus as consideration for the covenant, so a benefit described elsewhere and left out of the integrated covenant leaves the restraint unsupported and exposed to being held void for want of consideration .
4. Confidential Information and Trade Secret Protection
Employee must treat all Confidential Information as strictly confidential. Employee must not use or disclose Confidential Information except as required to perform authorized job duties or with Employer's prior written consent. Employee's obligations regarding trade secrets continue for the Trade Secrets Duration specified in Cover Terms, to the extent the information remains a trade secret. Employee's obligations regarding other Confidential Information continue for the Other Confidential Information Duration specified in Cover Terms.
5. Permitted Disclosures and Protected Conduct
Nothing in this agreement prohibits Employee from: (a) reporting possible violations of law to any government agency, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other federal, state, or local agency; (b) making disclosures protected under whistleblower provisions of any law; (c) discussing wages, hours, or other terms and conditions of employment as protected by applicable law; (d) testifying truthfully in legal proceedings; or (e) filing a sealed complaint in court using Confidential Information without liability. Pursuant to the Defend Trade Secrets Act (18 U.S.C. § 1833(b)), Employee may not be held criminally or civilly liable for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed court filing.
6. Return, Deletion, and Certification of Company Property
Upon termination of employment, Employee must promptly return to Employer all documents, devices, files, credentials, and other materials containing or relating to Confidential Information. Where permitted, Employee must permanently delete electronic copies of Confidential Information from personal devices and accounts. Employee must certify compliance with this section in writing upon Employer's request.
7. Non-Solicitation of Employees
During the Restricted Period, Employee must not Solicit, recruit, hire, or attempt to hire any Covered Employee. This restriction does not prohibit Employee from providing a professional reference upon request or from hiring a person who responds to a general advertisement not directed specifically at Employer's employees. This covenant does not apply if Employee's actual or expected annualized rate of earnings is $45,000 or less (820 ILCS 90/10(b)).
8. Non-Solicitation of Customers, Vendors, Referral Sources, and Business Partners
During the Restricted Period, Employee must not Solicit the business of any Covered Customer. This covenant does not apply if Employee's actual or expected annualized rate of earnings is $45,000 or less (820 ILCS 90/10(b)).
9. No Business with Covered Customers
During the Restricted Period, Employee must not accept, service, or do business with any Covered Customer, regardless of whether Employee or the Covered Customer first initiated contact. This covenant does not apply if Employee's actual or expected annualized rate of earnings is $45,000 or less (820 ILCS 90/10(b)).
10. Non-Investment
During the Restricted Period, Employee must not acquire or hold any active ownership interest in, serve as a director, officer, manager, or advisor to, or have material economic participation in any Competitive Business. This covenant does not apply if Employee's actual or expected annualized rate of earnings is $75,000 or less. Passive Public Holdings are permitted. The worker exclusions and layoff-compensation condition stated below also apply to this covenant.
11. Non-Disparagement
During the Restricted Period specified in Cover Terms for Non-Disparagement, Employee must not make statements that are intended to or reasonably likely to disparage Employer, its officers, directors, employees, products, or services. This section does not restrict Employee from making truthful statements in legal proceedings, providing truthful testimony, making disclosures to government agencies, or exercising rights protected by law.
12. Workers Exempt from the Illinois Covenant Restrictions
Notwithstanding any other provision of this agreement, the covenant not to compete and the covenant not to solicit do not apply to Employee working in construction unless Employee primarily performs management, engineering or architectural, design, or sales functions or is an owner. The covenant not to compete does not apply to Employee covered by a collective bargaining agreement governing public or educational labor relations. The applicable covenant does not apply to a nurse or certified nurse aide placed by a nurse agency on a temporary basis, to a broadcast employee subject to a prohibited post-employment geographic or time restraint, or to a licensed mental-health professional providing services to veterans or first responders where the restriction would increase the cost or difficulty of obtaining those services.
If Employee is terminated, furloughed, or laid off as the result of business circumstances or governmental orders related to the COVID-19 pandemic or under circumstances similar to it, the covenant not to compete and the covenant not to solicit are enforceable only if Employer pays Employee, for the period of enforcement, compensation equivalent to Employee's base salary at the time of termination, reduced by any compensation Employee earns through subsequent employment during that period (820 ILCS 90/10(c)).
13. No Conflicting Obligations
Employee represents that performing duties for Employer and complying with this agreement does not conflict with any prior agreement, court order, or legal obligation binding on Employee. Employee must promptly disclose to Employer any potential conflict that arises during employment.
14. Notice to Future Employers and Other Third Parties
Employer may disclose the existence and terms of this agreement to any prospective employer or business associate of Employee if Employer has a reasonable belief that Employee may breach this agreement. Employee consents to this disclosure.
15. Tolling During Breach
If Employee breaches any restrictive covenant in this agreement, the Restricted Period for that covenant is extended by one day for each day of the breach, so that the full duration of the restriction runs from the date the breach ends.
16. Remedies
Employee acknowledges that a breach of this agreement may cause Employer irreparable harm for which money damages would be inadequate. Employer may seek injunctive or other equitable relief in addition to any other remedies available at law.
17. Enforceability and Severability
If any provision of this agreement is found to be unenforceable, the remaining provisions remain in full force and effect. Each restrictive covenant in this agreement is intended to be independently enforceable.
18. Survival and Expiration of Each Covenant
Each restrictive covenant in this agreement survives the termination of Employee's employment for the Restricted Period specified in Cover Terms. Obligations under the Confidential Information and Trade Secret Protection section survive for the Trade Secrets Duration specified in Cover Terms to the extent they relate to trade secrets, and for the Other Confidential Information Duration specified in Cover Terms for other Confidential Information. All other provisions survive to the extent necessary to enforce rights that arose during employment.
19. Assignment and Successors
Employee may not assign this agreement or any rights or obligations under it. Employer may assign this agreement to any affiliate, successor, or acquirer of all or substantially all of Employer's business or assets. This agreement is binding on and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns.
20. Governing Law, Venue, and Dispute Process
This agreement is governed by the law listed in Cover Terms. Disputes will be resolved in the courts of the Governing Law state, subject to non-waivable rights under applicable law.
21. Entire Agreement, Amendment, Waiver, and Electronic Signatures
This agreement constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior agreements, understandings, and negotiations on this subject. This agreement may be amended only in writing signed by both parties. A party's failure to enforce any provision does not waive that party's right to enforce it later. This agreement may be executed in counterparts, including by electronic signature, each of which is an original.
Signatures
By signing this agreement, each party acknowledges and agrees to the restrictive covenant obligations above. Employee confirms having read and understood each provision, including the Cover Terms.
Employer
Employer: [Legal name of the entity that employs the employee]
Signature:
Signatory Name: [Full name of the authorized signatory signing for the employer]
Title: [Title of the authorized signatory signing for the employer]
Date:
Employee
Signature:
Print Name: [Full legal name of the employee]
Date: