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Non-Compete Agreements in Illinois

7/17/2015

A non-compete agreement, also known as a covenant not to compete, is a contract (usually between an employer and employee) where the employee agrees not to compete with the employer – typically in a certain industry, for a set amount of time and in a particular geographical area.

The nature of today’s transient workforce has caused many employers to include restrictive covenants in their employment contracts, such as non-compete agreements. A non-compete agreement seeks to protect the employer from an employee taking advantage of company resources, training, goodwill, trade secrets, and other assets, and using it to compete with that company. Historically, Illinois courts would enforce a non-compete agreement only if the employer was able to establish that the agreement was no broader than necessary to protect a legitimate business interest – which was defined as either confidential information or near-permanent relationships. This criteria made it difficult for employers to enforce their non-compete agreements, especially those in highly competitive and diluted sales markets.

In 2011, the Illinois Supreme Court issued landmark decision in the Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871 (Slip. Op. Dec. 1, 2011) case. The Reliable Fire case drastically changed the criteria from a strict test to a “reasonableness” standard, which considers the unique circumstances of each case. In weighing reasonableness, the court may consider various factors, including whether the non-compete agreement (1) is no greater than required to protect a legitimate business interest of the employer, (2) does not impose an undue hardship on the employee, (3) and does not injure the public (such as causing a general restraint on someone working in their given trade). The legitimate business interest definition was expanded into a “totality of the circumstances” test including non-conclusive factors, such as the near permanence of customer relationships, time and place restrictions, and the particular employee’s acquisition of confidential information from the employer.

Some Illinois appellate courts are also requiring adequate consideration for the non-compete agreement to be enforceable. Either two-years employment or some additional form of compensation for the non-compete agreement is sufficient in those jurisdictions.

If you have a non-compete agreement and are considering leaving your job, it is highly advised to speak with your attorney. Many employers aggressively enforce their non-compete agreements. If you are an employer, it is critical to draft an effective and enforceable non-compete agreement to protect your business. A short meeting may save you a lot of money and headaches in the future, no matter which side of the table you sit on.

Business Law Firm

7/13/2015

Every business, from the one-person shop to the international corporation needs to involve legal counsel at every stage of the business lifespan. The old adage is true, “an ounce of prevention is worth a pound of cure.”

Forming the Business

The law firm, along with other key players (accountant, financial planner, etc.) plays a vital role in educating a potential business owner about the various entities available. Among these are corporations, limited liability companies, partnerships, and sole proprietorships. Knowing the liability protection (or lack thereof) and tax ramifications at this stage can pay off in the future as the business grows.

Opening For Business

Properly structuring the timeline for opening a business is vital to efficient use the start-up funds. An attorney will help in this process.

Leasing and/or Buying Real Estate

Almost every business needs physical office or work space. The decision to lease vs. buy as well as properly handing the transaction is key to maximizing business funds and tax savings. A good business attorney will advise accordingly.

Hiring, Managing, and Terminating Employees

Almost every employer will tell you that handling personnel matters is the least enjoyable part of the job and the most risky in terms of litigation. Knowing the employment process, about employment contracts, employee handbooks, and the termination process is vital. Using a knowledgeable attorney at this stage may prevent larger problems.

Business Records

Many times, business owners are unaware of the consequences of the failure to properly maintain their records, including a corporate minute book. It takes a knowledgeable attorney to properly draft these documents, including the minutes (and no, accountants should not be doing this for you).

Day-to-Day Matters

Matters come up constantly that the business owner may have never experienced before or may need guidance on. Among these are: contract reviews and modifications, collections of accounts receivable, and licensing issues.

Succession Planning/Dissolution

Properly planning for the succession or dissolution of a business, well in advance, can provide certainty and peace of mind.

Author: Brian F. Johnson (bjohnson@peorialawyers.com)

Nothing in this article should be relied upon as legal advice. Please consult an attorney for advice tailored to your specific factual situation.

Beneficiary Designations

7/13/2015

One of the most overlooked parts of the estate planning process is ensuring that accounts or insurance policies have the proper beneficiary designations. A beneficiary designation means that after one’s death, money in an account or from an insurance policy will be distributed directly to someone (the “beneficiary”) listed on the account.

Checking beneficiary designations is important because the money from that account or insurance policy will go directly to that beneficiary (outside of the probate process regardless of what a validly executed Last Will and Testament states).

There are a few common examples that show how beneficiary designations can drastically change one’s estate plan.

Example 1: Predeceased child

Al was married to Kathy, but Kathy passed away before Al. They had two children during their marriage, Bob and Bill. Bob and Bill each get married and they have one child each. Bob passes away before Al, surviving are his spouse and child. Then Al dies.

After Kathy’s death, Al obtained a life insurance policy for $250,000. The beneficiary designation on his policy is: “To my children”.

Although it was probably Al’s intent that should either of his two children pass away before him, that the proceeds be split equally between his surviving son and his deceased son’s child, the likely outcome will be that Bill receives the total $250,000 to the exclusion of Bob’s child.

The beneficiary designation only read “To my children” and many life insurance companies will interpret this phrase to mean to the children only if they are living. If one child has died, then the surviving child will receive the proceeds.

This unintended result could have been avoided if the beneficiary designation was properly drafted. Please be aware that most life insurance companies have different rules for how to word the designation. Thus, it is important to contact the company on a case-by-case basis to determine the proper wording in your case.

Example 2: Ex-spouse windfall

John and Mary are married. They had three children during their marriage. John and Mary later get a divorce. During the marriage, Mary obtained a life insurance policy. When she purchased the life insurance, she named John as the primary beneficiary. After the divorce, Mary had her Last Will and Testament changed to leave everything to her children and specifically excluded John from receiving anything from her estate. Mary then dies, surviving are John and the three children.

Although Mary’s Last Will and Testament excluded John, he was still the primary beneficiary under the insurance policy. Therefore, John will receive the life insurance benefits if he applies to receive it.

This counterintuitive result can be understood due to the fact that a life insurance policy is a mere contract between the insurance company and the insured. According to the contract, John was the beneficiary and the insurance company is bound to make the benefit check payable to him.

This same example can relate beyond the common ex-spouse example to other situations as well: jointly owned real estate, living trusts, testamentary trusts, estate tax planning, payable on death, transfer on death, etc.

The prudent way to cure these unintentional results is to check the beneficiary designations on your accounts and insurance policies. Checking beneficiary designations is an ongoing process. When a new account is opened or a new insurance policy is purchased, it is recommended that you contact your attorney at JBN to discuss how to best title the account and list the beneficiary designations.

Author: Brian F. Johnson (bjohnson@peorialawyers.com)

Nothing in this article should be relied upon as legal advice. Please consult an attorney for advice tailored to your specific factual situation.

Estate Planning for Young Families

7/13/2015

The last thing families with young children want to think about is estate planning. However, if there were ever a time that estate planning was important, it is right after a family has their first child.

For example, let’s assume Jon and Jane have their first child, Junior. Before Junior was born, if Jon or Jane died without a will, a document that controls property after a person passes away, the surviving spouse would get all the property. This is the expected and probably favorable result. However, after Junior was born, if one of the spouses passed away without a will, the deceased spouse’s solely-owned property would generally be split between the surviving spouse and the surviving child. Thus, without a will, Jane and Junior, a newborn, would share the property equally. Initially this doesn’t seem to be a problem. However, for instance, if Jane wants to sell the home which had been in Jon’s name, a guardian would need to be appointed for Junior. This process could end up potentially costing thousands of dollars.

Most importantly, young parents should be aware of the guardian-nominating provision. If both parents were to unexpectedly pass away, the guardian nominated will be given preference over other people. Thus, the time and cost it takes to get a guardian appointed would be shortened and lessened.

Proper estate planning includes not only a will, but also powers of attorney and living wills.

A power of attorney is a document that appoints another person (called the “agent”) to make decisions for an individual (called the “principal”). A living will gives general directions to treating physicians with respect to death delaying treatment.   Most think that powers of attorney and living wills are only needed by the elderly. However, there are countless situations where if young families had a power of attorney, their situation would have been easier. For example, one need not look much past the Terri Schiavo situation several months ago to see how a power of attorney or living will would have made her situation easier. When a spouse acts as the agent, the entire process is simplified in that the well spouse need not be appointed guardian.

In Illinois, there are two types of powers of attorney—property and health care. The definitions are obvious, one gives an agent the power to make decisions for the principal regarding property and finances. The other gives an agent the power to make health care decisions.

Careful attention and consideration should be paid when determining who the agent should be. Of course, many young families choose their spouse. However, as time goes on, the documents can always be redrafted to appoint a child.

Estate planning is sometimes called “preventative planning.” Getting everything in order now can spare thousands of dollars in court costs and attorneys’ fees.

Author: Brian F. Johnson (bjohnson@peorialawyers.com)

Talking About Nursing Home Placement

7/11/2015

Few decisions are more difficult than the one to place a spouse or parent in a nursing home. Because nursing homes are seen as a last resort, the decision is generally overlaid by a sense of guilt. Most families try to care for loved ones at home for as long as (or longer than) possible, only accepting the inevitable when no other alternative is available.

The difficulty of making the decision can be compounded when family members disagree on whether the step is necessary. This is true whether the person disagreeing is the person who needs help, his or her spouse, or a child.

The placement decision can be less difficult if, to the extent possible, all family members are part of the process, including the senior in question, and if everyone is comfortable that all other options have been explored. This will not ensure unanimity in the decision, but it should help. Consider taking following steps:

Include all family members in the decision. Let them know what is happening to the person who needs care and what providing that care involves. If possible, have family meetings, whether with the family alone or with medical and social work staff where available. If you cannot meet together, or in between meetings, use the telephone, the mail, or the Internet.

Research other options. Find out what care can be provided at home, what kind of day care options are available outside of the home, and whether local agencies provide respite care to give the family care providers a much needed rest. Also, look into other residential care options, such as assisted living and congregate care facilities. Local agencies, geriatric care managers, and elder law attorneys can help answer these questions.

Follow the steps for finding the best nursing home placement available. If you and other family members know you've done your homework, the guilt factor can be assuaged (at least to some extent).

Where necessary, hire a geriatric care manager to help in this process. While hospitals and public agencies have social workers to help out, they are often stretched too thin to provide the level of assistance you need. In addition, they can have dual loyalties, to the hospital that wants a patient moved as well as to the patient. A social worker or nurse working as a private geriatric care manager can assist in finding a nursing home, investigating alternatives either at home or in another residential facility, in evaluating the senior to determine the necessary level of care, and in communicating with family members to facilitate the decision.

To find a geriatric care manager in your area, visit the Web site of the National Association of Professional Geriatric Care Managers at: www.caremanager.org.

Author: Susan Dawson-Tibbits (susan@peorialawyers.com)

Nothing in this article should be relied upon as legal advice. Please consult an attorney for advice tailored to your specific factual situation.

Non-Compete Agreements in Illinois

Business Law Firm

Beneficiary Designations

Estate Planning for Young Families

Talking About Nursing Home Placement

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