LinkedIn Connection Requests Don’t Violate Insurance Salesman’s Noncompete – IL Court

The First District recently considered whether an insurance salesman’s generic LinkedIn invites to some former co-workers violated non-compete provisions in his employment contract.

The plaintiff in Bankers Life v. American Senior Benefits employed the defendant for over a decade as a sales manager.  During his employment, plaintiff signed an employment agreement that contained a 24-month noncompete term that covered a specific geographic area (Rhode Island).  Plaintiff sued when it learned the defendant sent some LinkedIn connection requests to some former colleagues.

The court granted the defendant’s summary judgment motion on the basis that the plaintiff failed to offer any evidence that the defendant breached the noncompete by trying to induce three of plaintiff’s employees to join defendant’s new agency.  Plaintiff appealed.

Plaintiff argued that the LinkedIn requests were veiled, if not blatant, attempts to circumvent the noncompete by inviting former co-workers to join a competitor.

The First District affirmed summary judgment for the defendant.  For support, it looked to cases in other jurisdictions that considered if social media overtures can violate employee restrictive covenants.  The Court noted that a majority of these cases hold that passive social media postings (LinkedIn and Facebook, mainly) don’t go far enough to violate a noncompete.

The cases that have found that social media breached noncompete obligations involve clear statements of solicitation by the departed employee where he directly tries to sign up a former client or colleague. Since all the defendant did in this case was send generic LinkedIn messages, they didn’t rise to the level of an actionable solicitation.

The Court also rejected the plaintiff’s argument that summary judgment was premature and that the plaintiff should have the opportunity to take more discovery on this issue.  Illinois Rule 191 allows a summary judgment opponent to stave off judgment while it takes written and oral discovery to assemble evidence to oppose the motion.  But the plaintiff must show a “minimum level of information” showing a defendant is possibly liable before initiating a lawsuit or making a defendant submit to discovery requests.

Since the plaintiff failed to produce any evidence the defendant solicited any of plaintiff’s employees in the prohibited Rhode Island area, summary judgment for the defendant was proper.

Afterwords:

LinkedIn generic invites that don’t specifically ask someone to sever his/her relationship with current employer don’t go far enough to constitute improper solicitation;

Summary judgment is “put up or shut up moment;” the party opposing summary judgment must offer evidence that raises a question of material fact that can only be decided after a trial on the merits.

 

The Fifield Case: Two Years of Continuous Employment = Sufficient Consideration to Enforce Restrictive Covenants

In Fifield v. Premier Dealer Services, Inc. 2013 IL App (1st) 120327, http://www.state.il.us/court/Opinions/AppellateCourt/2013/1stDistrict/1120327.pdf the Court squarely held that two years of continued employment is required to uphold a noncompetition or nonsolicitation provision.

 Facts and Procedural History

Plaintiff resigned about three months after starting his job as an insurance salesman and went to work for a competing firm.  He preemptively sued his former employer seeking a declaration that the noncompete he signed wasn’t enforceable. employment contract were unenforceable.  The trial court agreed and granted summary judgment   for the plaintiff.  The employer appealed.

Held: Affirmed. 

Rules/Reasoning:

Court rejected the employer’s two main arguments: that (1) the two-year consideration rule didn’t apply because the Plaintiff signed the restrictive covenants before he was hired (and so this wasn’t really a post-employment restriction at all); and (2) the offer of employment itself was sufficient consideration to support the noncompete and nonsolicitation provisions – since Plaintiff was free to refuse to sign the employment contract and go work somewhere else. 

The Court held it didn’t matter whether Plaintiff signed the covenants before or after he was hired since at-will employment can constitute an “illusory benefit” as the employer can fire (and the employee can quit) at any time for any reason.

The Court also held that the two years of continued employment consideration rule applies even where an employee resigns on his own (like Plaintiff).  Fifield, ¶ 19.  And since Plaintiff was only employed for a little more than 3 months after he signed the noncompete, this fell far chronologically short of the requisite two-year period.  Fifield, ¶ 19.  In addition, the “first-year provision” (Plaintiff’s firing without cause during first employment year nullifies restrictive covenants) didn’t affect the Court’s analysis: “at most, [Plaintiff’s] employment was only protected for one year, which is still inadequate under Illinois law.”  Id.

 Take-away: Fifield could spell trouble for employers because it seems to open the door for employees to breach restrictive covenants with impunity – so long as they resign within two years of their start date.  The case also shows that courts may view at-will employment as “illusory benefit” and deem such employment insufficient consideration to enforce post-employment restrictions.  In addition, based on the Court’s discussion of the “first year provision”, employers may be well-served by providing that restrictive covenants won’t bind the employee if he’s fired without cause within two years of his start date.  This would seem to make it easier for an employer to argue that post-employment restrictions are enforceable.