Non-Compete News: Is Your Non-Compete Clause Too Broad? An Illinois Court Offers Guidance

Executive Summary: When drafting restrictive covenants, employers face a common dilemma about the scope of activities to be restrained. On the one hand, highly focused non-compete language tends to be more enforceable but might not protect the company's legitimate business interests. On the other, a one-size-fits-all blanket prohibition is more comprehensive but runs the risk it will be unreasonably broad and unenforceable. A recent decision by a federal court in Illinois, Medix Staffing Solutions, Inc. v. Dumrauf (N.D. Ill. Apr. 17, 2018), draws a bright line regarding when a non-compete clause is overbroad as a matter of law. Notably, the court rejected language used frequently in non-compete covenants throughout the country, finding the language so all-encompassing as to be entirely unreasonable.

Medix's Non-Compete: A Prime Example of Overbroad Language

The court found Medix's non-compete clause overbroad on its face because it restricted Dumrauf, a former Medix employee, from taking any position with another company that engages in the same business as Medix. The familiar language at issue barred Dumrauf from working (within 50 miles of his former office) for "any business" that "offers a product or services in actual competition with Medix" or which may be engaged "in the Business of Medix." The court found this language unworkable because it failed to consider what services Dumrauf actually performed for Medix or whether he or his new company truly compete with Medix. Rather, the clause barred Dumrauf from working for any company that merely works in the same fields as Medix, regardless of whether that company is an actual Medix competitor.

Though the court did not accept the common argument that Medix's clause was so broad Dumrauf could not work as a janitor for a competitor, it found the clause impermissibly prevented him "from taking any number of more plausible...