Illinois Non-Compete Changes

Illinois employers should be aware of new laws that came into being the first of this year. Among them is the Illinois Freedom to Work Act (the “Act”).

The Act is aimed primarily at non-compete agreements. A prior Illinois law focused solely on low wage employees (defined as earnings that do not exceed the greater of (i) the applicable minimum wage; or (ii) $13 per hour, currently). The new Act appears to reflect the greater trend against non-compete agreements growing across the country. It prohibits non-competes entered into on or after January 1, 2022, for employees earning $75,000 or less. Similarly, non-solicits are prohibited for employees earning less than $45,000 per year. Noteworthy, the Act also prohibits non-competes (and non-solicits) with employees terminated, furloughed, or laid-off as a result of Covid-19 circumstances.

Prior notice and a review period must be provided to employees. An employee prevailing on any claim for enforcement is entitled to recover from the employer all costs and attorney’s fees incurred. Additionally, the statute is given more teeth by allowing the Attorney General to investigate and intervene in a lawsuit or even file a lawsuit itself.

As with most laws, there are exceptions as well as additional requirements that must accompany a non-compete agreement. Employers should tread carefully in Illinois with these agreements.

If you have questions about this Act, non-compete provisions or other employment issues, please contact us.