Illinois Freedom to Work Act

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On May 31, 2021, the Illinois legislature passed SB 672, a bill that amends the Illinois Freedom to Work Act, the state’s non-compete statute. Governor J.B. Pritzker is expected to sign the bill into law. SB 672 would apply to restrictive covenant agreements entered into after January 1, 2022, and introduces a number of new restrictions on not only non-compete covenants, but also employee and customer non-solicitation covenants.

One of the most significant aspects of the bill is that it codifies the rule set forth in Fifield v. Premier Dealer Services, Inc., 2013 IL App (1st) 120327, which held that continued employment is not sufficient consideration for a restrictive covenant unless the employee remains employed for at least two years. Under SB 672, a restrictive covenant is supported by “adequate consideration” if (1) the employee worked for the employer for at least two years after signing a restrictive covenant agreement, or (2) the employer otherwise provided consideration adequate to support the restrictive covenant agreement, “which consideration can consist of a period of employment plus additional professional or financial benefits or merely professional or financial benefits adequate by themselves.” The bill does not define what type or amount of “professional or financial benefits” would be adequate.Continue Reading Illinois’ new non-compete restrictions expected to become law

Starting January 1, 2017, the new Illinois Freedom to Work Act will prohibit private sector employers from entering into covenants not-to-compete with “low-wage employees” who work in the state, and render unenforceable any such restrictions that are entered into on or after that date.

The Act defines a “low-wage employee” as one who earns the greater of $13.00 per hour or the minimum wage required by applicable federal, state, or local law. As of January 1, 2017, that would include any private sector employee in Illinois who is paid $13.00 per hour or less.

The Act defines a “covenant not to compete” as an agreement between an employer and a low-wage employee entered into on or after January 1, 2017, that restricts the employee from performing any work for another employer for a specified period of time, any work in a specified geographical area, or work for another employer that is similar to the employee’s work for the employer that is a party to the agreement. The Act thus appears limited to non-competes rather than barring covenants not to solicit customers or employees, or confidentiality agreements.
Continue Reading Illinois Bans Noncompetes for Low-Wage Employees