Overbroad Employee Confidentiality Provisions in Employment Agreements

On December 30, 2019, the Illinois Appellate Court, Second District, issued an opinion that discussed the circuit court's ruling that an employee confidentiality provision contained in an employment agreement was overly broad in scope and therefore unenforceable.  Indeck Energy Services, Inc. v. DePodesta, et al., 2019 IL App (2d) 190043 (Dec. 30, 2019).  The plaintiff-employer filed a lawsuit against former employees for breach of their employment contracts and for injunctive relief to enforce its confidentiality and noncompetition agreements.  After a bench trial, the trial court directed a finding in the defendants' favor, finding, among other things, that the confidentiality agreement was void and unenforceable.

The court found that the employee confidentiality agreement was unenforceable because it was unreasonably broad in scope.  It covered information of any nature or form related to the plaintiff's business, was not limited to protecting information that gave the plaintiff an advantage over its competitors, and was unreasonable as to duration.  While the appellate court did not reach the issue of the trial court's finding that the confidentiality agreement was overbroad and unenforceable, the trial court's decision is instructive for Illinois employers.  Arguably, the typical confidentiality provision contained in many Illinois employment agreements is similarly overbroad and unenforceable under Illinois law.  Yet many Illinois employers continue to routinely use this type of "everything but the kitchen sink" confidentiality provision.  Illinois employers should consider that narrowly tailored employee confidentiality agreements are much more likely to be enforceable in litigation.