As we previously reported, a new amendment to the Illinois Freedom to Work Act (820 ILCS § 90) regarding the use of non-competition and non-solicitation restrictive covenants for Illinois employees will take effect on January 1, 2022.

The law imposes certain restrictions on the use of restrictive covenants that are entered into after January 1, 2022, including:

  • 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-solicitation 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 it. Employees have the option of signing the agreement before the 14-day period has ended.
  • Employers are prohibited from entering into non-compete or non-solicit agreements with any employee who an employer terminates or furloughs or lays off as the result of business circumstances or governmental orders related 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 through subsequent employment during the period of enforcement.

As the deadline quickly approaches, Illinois employers should revisit their restrictive covenant agreements to ensure compliance with the new law.

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.