Articles Posted in Contracts

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IMG_3291-2-300x300Many employers rely on confidentiality agreements to protect sensitive business information. But not all confidentiality provisions are created equal, and if your agreement isn’t drafted properly, it may not hold up in court. While courts tend to scrutinize non-compete clauses, confidentiality provisions are usually enforceable, provided certain legal requirements are met. Here’s what employers need to know to ensure their agreements are valid and effective.

Include the Required Whistleblower Language

Under the federal Defend Trade Secrets Act of 2016 (DTSA), employers must include a whistleblower immunity notice in any confidentiality agreement. This notice informs employees that they won’t be held liable for disclosing trade secrets in protected situations, such as reporting illegal activity or participating in a court proceeding under

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Conditional Gifts?

A recent decision by the Massachusetts Supreme Judicial Court has sparked interest across legal circles.  In a case centered around a $70,000 engagement ring, the court ruled that an engagement ring must be returned to the purchaser if the marriage does not take place, regardless of who may have been at fault. This ruling aligns Massachusetts with the majority of jurisdictions, where an engagement ring is considered a conditional gift—given with the expectation of marriage and thus, contingent upon the marriage actually happening.

While Illinois follows similar principles, this ruling offers a chance to examine how Illinois contract law views the conditional nature of engagement gifts and what factors courts might consider in similar cases.

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Neural Data: What Illinois Business Owners Need to Know

California enacted an Amendment to the California Consumer Privacy Act (CCPA) that adds neural data to the list of protected personal sensitive information. For Illinois business owners—especially those conducting business in California or utilizing neurotechnology—this development is worth understanding, as it marks another step in the expanding landscape of data privacy laws. Neural data, often collected through non-invasive neurotechnology tools, is now considered sensitive and will be protected under the same stringent requirements as other personal information like genetic, biometric, and geolocation data.

What is Neural Data and Why is it Important?

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Insurance Coverage for BIPA violations.

Businesses across Illinois are facing serious challenges in securing insurance coverage for lawsuits brought under the Biometric Information Privacy Act (BIPA).   And a recent decision by the federal court in Chicago – Westfield Insurance Company v. UCAL Systems, Inc. – dealt yet another blow to corporate policyholders.  This ruling is just the latest in a series of legal setbacks that make obtaining coverage for BIPA claims under standard Commercial General Liability (CGL) policies an uphill battle.

What Is BIPA, and Why Does It Matter?

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Non-Competes Now a Nonstarter

This is really big news!

Businesses that have entered into non-compete agreements with current or recently departed employees will need to come up with other ways of achieving the investment-protecting goals those non-competes were designed to accomplish. That’s because the Federal Trade Commission has issued a final rule, which will take after 120 days after publication in the Federal Register, that invalidates current non-competes for most workers and bans new ones for all employees.

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Aret Smart Contracts Smart?

Imagine if the paper on which your business’ contracts are written could somehow come to life and automatically send payments to your collectors—and receive payments from your debtors—at the appropriate times, as different provisions of said contract are triggered.

That’s more or less how electronic smart contracts, self-enforcing pieces of computer code set up to execute on the blockchain, more efficiently streamline certain processes. While sometimes legally enforceable, they have their drawbacks and will probably never completely replace traditional legal contracts.

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Are Non-Competes Really Enforceable?

Most non-compete agreements between employers and employees violate the National Labor Relations Act, according to a May 30 memo from Jennifer A. Abruzzo, general counsel for the National Labor Relations Board.  Such agreements, which bar employees from taking certain types of positions or running certain types of businesses after leaving their current positions, specifically run afoul of Sections 7 and 8(a)(1) of the act, she wrote.

Section 7 provides that employees have a “right to self-organization, to form, join or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” Abruzzo noted.  As such, under most non-competes, employers engage in an unfair labor practice that violates Section 8(a)(1) because they “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in [S]ection 7.”

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Independent Contractors

A recent Illinois Court of Appeals decision in an Illinois Wage Claim Act case puts a magnifying glass on the sticky wicket employers can find themselves when they are unable to pay an outside contractor, at least under certain circumstances.

The decision in O’Malley v. Udo, 2022 IL App (1st) 200007 (Jan. 14, 2022) revolved around an independent contractor who was paid $1,000 per work day plus expenses, was sent 1099 forms at the end of the tax year, was mostly free to work from his Evanston home, and otherwise clearly identified in the written agreement between the parties – and at his insistence – as a consultant.

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Illinois Freedom to Work Act 

Illinois Employers who want to protect their business and trade secrets by using restrictive employment contracts will find new hoops to jump through.   The enforcement of non-compete and non-solicit agreements, designed to erect roadblocks to prevent former employees from gaining an unfair advantage due to their proprietary knowledge of your business or relationships with your customers, has always been tricky.  But a recent law will make it more complicated.

An amendment to the Illinois Freedom to Work Act that will take effect on January 1, 2022, will create new hurdles for business owners hoping to prevent employees who have left on frosty terms from exploiting their knowledge of customer contacts, pricing and other trade secrets that could enable them to take shortcuts to parity as your adversary.

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For the first time to our knowledge a judge has ordered rent relief for a Chicago restaurant.   The bankruptcy judge ruled that the “Act of God” clause in the lease gives the restaurant rent relief when it was forced to closed during the the COVID-19 mandatory closings.

George Bellas Chicago Business Lawyer George Bellas answers questions for business owners.

CoronaVirus FAQs

The force majeure clause in the lease of Italian restaurant Giglio’s State Street Tavern eliminated the restaurant’s obligation to pay full rent during the time when the City and State implemented the “stay-at-home order” to deal with the pandemic.   (For more info on the force majeure contact clause, see my other Blog on force majeure.)

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