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MEDI CAL SPAS

Non-Compete Agreement

NON-COMPETITION AGREEMENTS IS POPULAR IN MEDSPAS

ENFORCING NON-COMPETITION AGREEMENTS IN MED SPAS: IS THERE ADEQUATE CONSIDERATION? By RENEE E. COOVER, JD

Renee Elise Coover rcoover@thierschlaw.com practices with Thiersch & Associates in Chicago, Illinois. Thiersch & Associates specializes in med spa law.

For more information contact Thiersch & Associates, (312) 981-0990 Thiersch@thierschlaw.com

The use of non-competition agreements is becoming very popular in med spas but enforcing these agreements is becoming even more difficult. A non-competition agreement is designed to prevent employees from taking clients, patient lists or other confidential information with them when they leave the med spa. To have an enforceable non-competition agreement (also known as a “restrictive covenant”), there must be adequate consideration in return.

A

dequate consideration? Just what exactly Similarly, if a new employee signs a non-compete is

that?

Every

contract

requires agreement as a condition of employment, the

“consideration” which is the benefit each employment itself is also adequate consideration.

party expects to get from entering into the contract. However, what happens if you want an existing The consideration must be adequate enough to employee to sign a non-compete agreement to protect constitute an enforceable contract. In the the interests of your business? If the existing employee employment context, when an employee is “at will” signs an agreement promising not to compete during meaning he or she can be terminated at any time or subsequent to (for a specified time) his or her without cause, the employment itself constitutes employment, adequate consideration.

is

that

employee’s

continued

employment adequate consideration? Well…it depends.

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MEDI CAL SPAS

BUT ENFORCING THEM IS BECOMING DIFFICULT

Non-Compete Agreement

For continued employment to be adequate to enforce a period does not begin to run until the date the non-compete agreement on the existing employee, the agreement is signed, even if it is amending a previous employment must last a sufficient amount of time. non-compete agreement.

americanmedspa.org

For example, if a new employee signs a non-compete and the employer fires the individual the next day, it So what does this mean for employers? If a company would not be fair to restrict the employee from uses non-compete agreement for its employees, the competing for years in the future. According to Illinois employee must work for the company for a minimum law, the same may hold true for existing employees of two years. Or the employer must give the employee that sign non-compete agreements.

some additional form of consideration – a signing bonus or a promotion- to support the non-compete

In a recent decision, the Fifth District of the Illinois agreement. Appellate Court held that to enforce a non-compete agreement, “there must be at least two years … of If you are unsure about the enforceability of your continued employment to constitute adequate current non-compete agreements or want advice on consideration.”1 This means that the employee must how to draft enforceable non-compete agreements for be employed, under the terms of the non-compete your employees, be sure to consult with an agreement, for two years before the non-compete is experienced attorney who can guide you through the enforceable against the employee. And the two –year process. ■

1 Diederich Insurance Agency, LLC v. Smith, 952 N.E.2d 165, 351 Ill. Dec 792 (Ill.App. 2011). This opinion came down from the 5th District. Although the Fifth District only encompasses a small part of the state, Courts look to the decisions in other districts when making rulings and thus, this ruling may be followed by other districts in the State. www.medicalspasreview.com

For more information: American Med Spa Association

MEDI CAL SPAS •

ENFORCE NON-COMPETE AGREEMENT IN YOUR MEDSPA  

IS THERE ADEQUATE CONSIDERATION?

ENFORCE NON-COMPETE AGREEMENT IN YOUR MEDSPA  

IS THERE ADEQUATE CONSIDERATION?