Illinois to Limit the Use of Non-Compete and Non-Solicits with Employees


The impact of the COVID-19 pandemic on both employers and employees has renewed the spotlight on non-compete agreements because of staffing shortages and an increasing number of employees changing careers. Effective January 1, 2022, employers in Illinois will need to comply with the Illinois Freedom to Work Act, which restricts the use of non-competes and other restrictive covenants in Illinois. Companies using these agreements should familiarize themselves with the Act or run the risk of being dragged into Court.  The Act limits the use of non-competes in the following way:

  • Prohibits the use of non-competes with employees earning $75,000 or less;
  • Prohibits the use of non-solicit agreements with employees earning $45,000 or less; and
  • Adds a disclosure requirement for the employer to notify the employee in writing to consult with an attorney before entering into a covenant and requires a consideration period of 14 days for the employee to review the covenant.

The Act also automatically voids all restrictive covenants that do not meet the following requirements:

  • The employee receives adequate consideration;
  • The covenant is ancillary to a valid employment relationship;
  • The covenant is no greater than is required for the protection of a legitimate business interest of the employer;
  • The covenant does not impose undue hardship on the employee; and
  • The covenant is not injurious to the public.

Courts will determine the above requirements when deciding whether an employer’s non-compete and non-solicit violates the Act. Illinois employers who regularly use non-compete and non-solicit agreements should be aware of these changes and adjust their agreements to ensure compliance with the Act. Should you have any questions concerning these new developments, please do not hesitate to contact our team of professionals.

Rafael E. Lázaro is a founding member of Lázaro Law Group, LLC. With a particular emphasis on sexual harassment, Mr. Lázaro has dedicated his career to improving the workplace.

Illinois to Limit the Use of Non-Compete and Non-Solicits with Employees

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