Types of Damages Available in Breach of Non-Compete Agreement Cases

Many Illinois employers include restrictive covenants in their employment agreements with employees. Two of the most common types of restrictive covenants are a covenant not to compete, also commonly referred to as a non-compete agreement, and a non-solicitation agreements. As one might guess from the name, restrictive covenants restrict an employee from certain behaviors for a specified period of time. Employers use these types of restrictive covenants to prevent competitors from obtaining the employer’s secret proprietary information that the employee obtained during his employment or to prevent former employees from taking clients or other employees with them when they leave.

What happens though if an employee violates his non-compete or non-solicitation agreement? What can an employer do to protect its business and what type of damages might the competing employee (or the new employer) be liable for?

A non-compete agreement is part of a contract. Thus, an employer may bring a breach of contract claim against the employee for violating that agreement. If the employee’s new employer assisted or encouraged the employee to violate his restrictive covenants, the employer may also have a claim against the new employer for tortious interference with contract or even a claim for unfair business practices.

Many times, litigation over a breach of a non-compete or non-solicitation agreement involves emergency litigation. The purpose of such emergency litigation is to stop the employee from continuing to violate the restrictive covenant and to minimize the harm from such violations. Below we discuss the most common types of relief available for breaches of non-compete agreement or non-solicitation agreements.

The most commonly sought (and most commonly granted) form of relief available for a breach of a non-compete agreement is an injunction. An injunction is an order from the court prohibiting or requiring a party from doing something. In emergency litigation, the employer frequently seeks a type of injunction called a preliminary injunction. When seeking a preliminary injunction, the employer is not required to prove its entire case but must put forth sufficient evidence to show that it is likely to win its case. Instead of trying to prove an entitlement to a specific amount of money, the employer will need to show that it has a valid, enforceable non-compete agreement with the former employee, that the employee engaged in behavior prohibited by the non-compete agreement and that as a result the employer has or is likely to sustain irreparable harm to its business. If successful, the court will enter an order upholding the non-compete agreement and requiring the employee to stop the violative conduct for the duration of the lawsuit.

An employer may also seek to recover money from the former employee or the new employer. These are typically called monetary damages. One popular form of monetary damages often sought is compensatory damages. This is money awarded as compensation for harm caused or profits lost due to the breach of the non-compete agreement or other restrictive covenant. When an employer seeks monetary damages, it must provide evidence that it suffered an actual loss due to the breach. This can range from nominal sums to incredibly large amounts, depending on the nature of the breach and the effect the breach had on the employer’s business. Proving monetary damages in restrictive covenant breach cases can be incredibly difficult and requires a keen understanding of the nature of the damages sought and the type of evidence required to establish entitlement to those damages. Often, it will require the testimony of an expert witness to quantify the amount of monetary damages an employer is entitled to. Having an experienced non-compete agreement lawyer in your corner can be difference between recovering monetary damages and walking away empty-handed.

Finally, in some cases the unsuccessful party may be liable for court costs and the successful party’s attorney fees. Because a suit for breaching a non-compete agreement is typically a breach of contract suit, the basis for awarding attorney’s fees must come from the contract itself. There is an exception to this though under Illinois law, which provides a statutory right to attorney fees to employees who successfully defend against a claim to enforce a restrictive covenant.

The Chicago restrictive covenant attorneys at Lubin Austermuehle, P.C. have decades of experience drafting, negotiating, and litigating restrictive covenants including non-compete agreements, non-solicitation agreements, and non-disclosure agreements. Our business attorneys are conveniently located in Chicago and DuPage County and represent employees and employers throughout the Midwest region, including Illinois, Indiana and Wisconsin. Whether you are an employee who has been terminated or an employer seeking to determine if your restrictive covenants are enforceable, we can help. Contact us today online or by phone at 630-333-0333 to schedule a confidential consultation with a restrictive covenant enforceability lawyer in Chicago or Elmhurst, Illinois.