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Are non-compete agreements enforceable in Illinois?

Your company's intellectual property, trade secrets and proprietary content and procedures are vital to its success. Protecting such sensitive information is paramount, even if it means requesting that any new personnel that you bring in to your business in Chicago signs a non-compete agreement. In general, such agreements place certain limitations on what an employee can and cannot do in relation to your business once they have left. The question is whether or not such agreements are enforceable. 

Illinois does indeed have statutes that address non-compete agreements, yet they are limited in scope. According to the American Association of Corporate Counsel, Illinois' Freedom to Work Act on expressly prohibits non-compete agreements when made between an employer and low-wage employees. Specifically, an employer cannot attempt to prohibit a low-wage employee from: 

  • Going to work for another company for any pre-determined time period
  • Securing new employment in a specific geographic area
  • Simultaneously work for another company that operates in the same industry 

Bipartisan bill would expand FHA

Individuals looking to rent property in Michigan for themselves or their families may be denied by landlords if they receive assistance. However, a Senate bill that has the support of both parties would make that illegal. Specifically, it would broaden the Fair Housing Act (FHA) by banning landlords from discriminating based on income or because a person was a veteran. Currently, there is no federal protection against such discrimination.

There are protections in place for those attempting to rent in select cities and states throughout the nation. By allowing low-income individuals to live in better neighborhoods, they would likely have access to better jobs. They may also be able to live in areas that have quality schools for their children. Living in quality areas may also allow people to obtain better medical and other care. There are a couple of key hurdles that may prevent the legislation from passing.

Knowing who can terminate contracts for convenience

Most of those who deal contractually in Detroit and Chicago likely do so assuming that the only way their contractual partners can terminate their agreements is if they have legitimate cause to do so (after all, how valid can an agreement be if one side can walk away from it at any time?). Yet there are scenarios where a contracted partner can indeed end an agreement for its convenience. The trick to avoid getting caught up in such a scenario is knowing what situations the right to terminate for convenience applies to. 

Typically, this privilege is extended automatically to government entities. Indeed, the Code of Federal Regulations shows that the right to terminate all or part of a contract due to it not being in an agency's best interest is inherent. In the event that a government entity does end an agreement in this way, its contracted partner only has the right to collect payment for whatever services it had already rendered, as well as the costs associated with ending its work. 

What to include in an employment contract

As a Michigan or Illinois business owner or someone who otherwise has a hand in company hiring decisions, you may find it beneficial to create an employment contract that protects your business, should you and your employee part ways. At Pentiuk, Couvreur & Kobiljak, P.C., we understand that a solid, carefully worded employment contract can prove to be your best line of defense against litigation, and we have helped many people in your shoes take measures to protect themselves and their lifeblood.

According to Inc., while your employment contract is a good place to include specifics about your decided-upon payment arrangements and your expectations for your employee as far as job duties, you can also accomplish much more with this document. More specifically, many employers choose to include noncompete clauses within their employment contracts, which can help you make sure that your workers do not leave you and take everything they have learned from you to one of your competitors.

How can you obtain and protect a trademark?

As a business owner in Michigan or Illinois, you want your business to stand out from your competitors. One way of accomplishing this is by obtaining a trademark. The terms "trademark" and "brand name" are interchangeable; yet, according to FindLaw, in addition to words or names, a trademark can also be a device, a symbol or any combination of the four, used to indicate the source of goods for sale and to extinguish the goods from a particular seller or manufacturer from the goods sold or manufactured by competitors. 

If you are the owner of a trademark, you have the option of registering it with the U.S. Patent and Trademark Office. Federal registration of your trademark is voluntary, however, and you do not cede your protections under trademark law if you choose not to register it. The actual use of your trademark in commerce grants you common law trademark rights regardless of whether or not you choose to register it. This means that if you are the first to use a trademark, you may seek legal recourse if another company infringes your intellectual property rights by co-opting use of your established trademark. 

Understanding LLCs

Entrepreneurs in Illinois and Michigan must choose how they would like new ventures to be managed and how they prefer their businesses to be taxed. A company may be established as a sole proprietorship, a partnership, a corporation or a limited liability company. Each framework has its own sets of pros and cons, so people should review each one carefully.

As explained by Forbes, a limited liability company really is a business structure unlike an S corporation which is essentially just a choice in how a company is taxed. In fact, an LLC can choose to be taxed as an S corporation. Companies that provide professional services may not be able to take advantage of the new corporate tax rate reduction and may find that an LLC works well for them.

Bank accused of racial discrimination in mortgage lending

Many people throughout Michigan and across the country still face unlawful discrimination in housing and lending. According to a new lawsuit, Liberty Bank discriminated against mortgage borrowers in African American and Latino neighborhoods in two Connecticut cities. The lawsuit was filed by the National Consumer Law Center and the Connecticut Fair Housing Center. They accused the bank of "redlining," denying home loans or avoiding giving credit to buyers because of the racial or ethnic identifications of their neighborhoods.

Redlining is a prohibited practice under the federal Fair Housing Act. According to an attorney filing the lawsuit, the case came after a two-year investigation that involved examining the bank's lending data. The suit alleges that from 2010 to 2016, the bank originated 1,197 home loans each year, but only 40 of those annually were to African American or Latino home buyers. This was 3.34 percent of all completed loans. The complainants said that the bank made more loans than expected in white areas and fewer in those identified as African American or Latino.

Arguments surrounding non-compete agreements

Businesses in certain industries often ask employees to sign non-compete agreements as a part of the hiring process. These agreements restrict employees from working in similar industries or for companies that are in direct competition with the business once workers have terminated their employment with the company. If an employee should quit and go to work for an opposing company, they may share information that could hurt their current employer. Non-compete clauses are implemented as a way to keep trade secrets and other company information private.

Some employees argue that by signing a non-compete agreement, they are essentially giving away their right to work in the industry should they get fired or lose their job. Although their work experience and skill set may be focused in one industry, they are not able to pursue employment in that industry and are forced to look elsewhere, even though the jobs may pay less or cause them to relocate. In some cases, that may be the only job they know how to do. Once a non-compete agreement is signed, they are not able to perform at that job anymore if they are terminated.

Undocumented immigrants may sue under FHA

A federal appeals court has ruled that undocumented immigrants may not necessarily be excluded from bringing housing discrimination claims. Michigan residents might be interested to learn how the court came to that ruling and what impact it might have. The judge who wrote the opinion said that the plaintiffs in the case had presented evidence sufficient to suggest that a requirement that applicants have proof of legal status could be harmful to Latinos as a class. Latinos are a protected class under the Fair Housing Act.

The ruling comes after a district court had dismissed the claims of four families against a mobile home park. The families appealed, and the U.S. Court of Appeals for the 4th Circuit decided the lower court had made a mistake. The case was sent back down for a determination of whether the policy requiring proof of legal status disproportionately impacts Latinos.

Media merger denied by FCC, lawsuits begin

Companies in the greater Detroit, Michigan area and the Chicago metropolitan area who engage in discussions with other businesses about potential mergers should always know that such deals may turn south even when they begin in a friendly and positive manner. In some cases, the change of tune regarding merger discussions might even involve a third party. The decisions or actions of that third party may even be said to be influenced by one of the potential merging companies.

Such is the case today in a dispute that has arisen between two media corporations that had been attempting to merge but that now find themselves embroiled in multiple lawsuits against each other. As reported by the Chicago Business Tribune, the Federal Communications Commission failed to approve the requested merger between the two corporations, one based in Chicago and the other in Maryland. The FCC referred the matter to a judge who put the final kibosh on the deal.

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