New tool when employees defect to competition: bonus forfeiture — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

New tool when employees defect to competition: bonus forfeiture

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in Employment Law,Human Resources

Employers looking to discourage their employees from going to work for a competitor, take note! As a general matter, courts aren’t in favor of noncompete agreements. Nevertheless, Illinois employers may now have a new weapon to keep employees from taking your secrets when they leave.

According to Viad Corp. v. Houghton (No. 08-CV-6706, ND IL, 2010), employers may be able to accomplish the same objective as a noncompete by creating a forfeiture-for-competition provision.

In Viad, the court enforced an agreement under which an employee was required to repay a hefty bonus she received from her company before leaving to work for a competitor.

If you leave, you must pay

Anne Houghton was a senior vice president at Viad Corp. She voluntarily resigned and went to work for The Freeman Companies, a Viad competitor. Houghton had participated in an incentive plan that required repayment of bonuses received during the last two years of ...(register to read more)

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