BRR’s 50 State Noncompete Survey Updated – Illinois, Montana, Texas, and Wisconsin

The BRR 50 State Noncompete Chart has been updated (as of April 29, 2012) to reflect an update to Illinois, Montana, Texas, and Wisconsin laws.

The Illinois Supreme Court has rejected the controversial notion initially expressed in a 2009 decision from an Illinois appellate court (Sunbelt Rentals, Inc. v. Ehlers, 394 Ill.App.3d 421, 333 Ill.Dec. 791, 915 N.E.2d 862 (2009)) that a court need not consider whether a former employer has a legitimate business interest being protected by the noncompete agreement.  The Supreme Court’s decision, Reliable Fire Equipment Co. v. Arredondo, 2011 WL 6000743 (Dec. 1, 2011), although rejecting Sunbelt’s abandonment of the legitimate business interest test, did expand the scope of recognized legitimate business interests in Illinois, basing the test on the totality of the circumstances, rather than defined interests.

The Montana Supreme Court, in Wrigg v. Junkermier, 362 Mont. 496 (2011), held that there is no legitimate business interest (a necessary element to enforcement of noncompetes in most states) in enforcing a noncompete against a former employee who was terminated by the company without cause.

In Texas, as noted in connection with the Texas Supreme Court’s prior (now withdrawn and replaced) June 2011 decision (see Texas Overhauls Noncompete Law), until recently, noncompete law differed markedly from other states insofar as the consideration given for a noncompete in Texas had to relate to the legitimate business interest sought to be protected by the noncompete.  In December 2011, the Texas Supreme Court issued its replacement decision (Marsh v. Cook, 354 S.W.3d 764 (2011)) requiring that the consideration be “reasonably related” to the legitimate business interest to be served.

Finally, the chart was also revised to correct (thanks to a note we received from a very helpful user of the chart) a typographical error in the reference to Wisconsin’s statute and that Wisconsin law remains undecided on whether a noncompete will be enforceable against a discharged employee.