Date: 04/07/22

Author: Jake A. Leahy 

Published By: Prime Law Group, LLC

Employers Beware: Recent Changes Create Major Roadblocks to Non-compete and Non-Solicitation Agreements in Illinois

In recent years, non-compete agreements have become increasingly prominent as state legislators continue to make an effort to restrict their application to low-wage workers. Consistent with that trend, at the start of this year, new Illinois non-compete and trade secrets restrictions, as per the Freedom to Work Act, went into effect. 

Notably, although the law went into effect on January 1, 2022, the law is not intended to be retroactively applied to employment agreements. Therefore, businesses that include non-compete agreements for their employees need only to be aware of these restrictions moving forward. 

Previously, the Freedom to Work Act applied to non-compete agreements for low-wage workers. The existing law generally defined low-wage workers as an employee who makes less than minimum wage or less than thirteen dollars an hour. The statute also was ambiguous as to whether the restriction precluded non-solicitation agreements for these individuals.

The new law makes some major changes to this existing framework. Now, “low-wage” will be defined as any employee who makes less than $75,000 annually. Surely, this new threshold is a far cry from the previous threshold that was established.

Likewise, the legislation says that any employee with a salary below $45,000 will not be eligible to be subject to a non-solicitation agreement.

While these new restrictions apply to non-compete and non-solicitation agreements, they do not apply to confidentiality, non-disclosure, trade secret protection, or similar types of agreements.

Non-compete agreements generally have been subject to a variety of restrictions implemented by state courts as to their enforceability. This law seeks to codify the restrictions that have already been established in Illinois. Non-compete agreements have already been deemed to be enforceable only when there is “adequate consideration” exchanged. Fifield v. Premier Dealer Services, Inc., 993 N.E.2d 938 (Ill. App. Ct. 2013). 

The statute says that “adequate consideration” is met if:

1. “The employee worked for the employer for at least 2 years after the employee signed an agreement … or

2. The employer otherwise provided consideration adequate to support an agreement to not compete or to not solicit, which consideration can consist of a period of employment plus additional professional or financial benefits or merely professional or financial benefits adequate by themselves.”820 ILCS 90/20

Employers might not be off the hook just because their employees make over $75,000 annually. Employees who may be subject to non-compete agreements under the new law will have to be informed of their rights. The law says that an agreement “not to compete or a covenant not to solicit is illegal and void unless: 

1. The employer advises the employee in writing to consult with an attorney before entering into the covenant and 

2. The employer provides the employee with a copy of the covenant at least 14 calendar days before the commencement of the employee’s employment or the employer provides the employee with at least 14 calendar days to review the covenant. An employer is in compliance with this Section even if the employee voluntarily elects to sign the covenant before the expiration of the 14-day period. 

820 ILCS 90/20 new (emphasis added)

Another consideration here, especially for businesses, is that the Attorney General is tasked with enforcing if a company is “engaged in a pattern and practice prohibited by the act.” 820 ILCS 90/30 (new). The Attorney General is authorized to initiate a civil action against the entity and seek $5,000 for a violation or $10,000 for any repeat violation that takes place. Since making a mistake in violation of the act surely can be expensive, businesses should be cognizant of not recycling previous employment agreements that may no longer meet statutory requirements.

Attorney General enforcement is not the only mechanism available. The statute provides for any prevailing employee in civil litigation or arbitration against an employer who wrongfully used a noncompete agreement, the employee is entitled to the recovery of legal fees associated with the claim. 

In Conclusion

To recap, employers need to first be aware that there will be hefty penalties for any new noncompete or non-solicitation agreements which run afoul of the statutory requirements. Any “low-wage” employee who makes under $75,000 must not be subject to a non-compete and any employee who makes under $45,000 must not be subject to a non-solicitation agreement. 

For any employees who are above the aforementioned thresholds, they need to be given 14 days’ notice to review and there must be adequate consideration provided. Surely the question of “adequate consideration” will be heavily litigated, especially given that the statute includes a fee shifting provision for a prevailing party. 


Jake A. Leahy is a current law student at the University of Illinois Chicago School of Law (formerly the John Marshall Law School). He also serves as a board member and board vice president of Bannockburn School District #106.