On August 13, 2021, Illinois Governor J.B. Pritzker signed into law an amendment to the Illinois Freedom to Work Act (820 ILCS § 90), which imposes restrictions on the use of non-competition and non-solicitation (employee and customer) restrictive covenants for Illinois employees. The law takes effect on January 1, 2022, and only applies to restrictive covenants entered into after January 1, 2022.

Below are some of the key provisions of the law:

  • The law prohibits employers from entering into non-competition agreements with employees who earn $75,000 per year or less and also prohibits employers from entering into non-solicit agreements with employees who earn $45,000 per year or less.
  • For non-compete agreements, the salary threshold amounts will increase every five years by $5,000 until January 1, 2037, when the amount will equal $90,000.  For non-solicit agreements, the salary threshold amounts will increase every five years by $2,500 until January 1, 2037, when the amount will equal $52,500.
  • Employers will now be required to advise employees to consult with an attorney before entering into a non-compete or non-solicit agreement and must also provide employees at least 14 days to review the agreement and decide whether to sign. Employees have the option of signing the agreement before the 14-day period has ended.
  • Employers are prohibited from entering into restrictive covenants with employees who have lost their jobs due to the COVID-19 pandemic or under circumstances that are similar to the COVID-19 pandemic unless enforcement of the covenant not to compete includes compensation equivalent to the employee’s base salary at the time of termination for the period of enforcement minus compensation earned though subsequent employment during the period of enforcement.
  • If an employee prevails on a claim filed by an employer seeking to enforce a covenant not to compete or a covenant not to solicit, the employee can recover all costs and reasonable attorney’s fees from the employer regarding such claim. A court or arbitrator may also award appropriate relief.

Illinois employers should revisit their restrictive covenant agreements in light of these changes.

Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and co-head of the firm’s Whistleblowing & Retaliation Group. Steven’s practice focuses on defending complex employment litigation involving claims of discrimination, harassment and retaliation; wage-and-hour laws; breach of employment contract…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and co-head of the firm’s Whistleblowing & Retaliation Group. Steven’s practice focuses on defending complex employment litigation involving claims of discrimination, harassment and retaliation; wage-and-hour laws; breach of employment contract; and restrictive covenants (e.g., non-competition agreements). Steven is also at the forefront of defending whistleblower retaliation claims, and routinely conducts investigations arising from whistleblower reports. He has successfully tried cases to verdict in Illinois, Florida and California, and defended what is reported to be the largest Illinois-only class action in the history of the U.S. District Court for the Northern District of Illinois. He has also testified in defense of his investigations in federal court.

Photo of Edward Young Edward Young

Edward “Eddie” C. Young is an associate in the Labor & Employment Law Department and a member of the Firm’s Whistleblowing & Retaliation and the Non-Compete & Trade Secrets Groups.

Eddie’s practice focuses on defending companies in all aspects of employment litigation, including…

Edward “Eddie” C. Young is an associate in the Labor & Employment Law Department and a member of the Firm’s Whistleblowing & Retaliation and the Non-Compete & Trade Secrets Groups.

Eddie’s practice focuses on defending companies in all aspects of employment litigation, including claims of discrimination, harassment and retaliation, breach of restrictive covenants (e.g., noncompetition and nonsolicitation), and whistleblower retaliation. He has handled such cases before state and federal courts throughout the country, as well as before the U.S. Equal Employment Opportunity Commission, the Illinois Department of Human Rights, the American Arbitration Association and the Department of Labor.

Photo of Dakota D. Treece Dakota D. Treece

Dakota earned her J.D. from DePaul University College of Law, where she was an Associate Editor for the DePaul Law Review and a teaching assistant for a constitutional law course and DePaul’s Academic Success Program. While at DePaul, she worked as a law…

Dakota earned her J.D. from DePaul University College of Law, where she was an Associate Editor for the DePaul Law Review and a teaching assistant for a constitutional law course and DePaul’s Academic Success Program. While at DePaul, she worked as a law clerk at a labor union and as a student attorney in the Misdemeanor Clinic. Dakota received the Dean’s Certificate of Service for her volunteer efforts while in law school and was awarded the highest overall grade in her labor law course.