Illinois Law Places New Limits on Restrictive Covenants

On January 1, 2022, Public Act 102-0358, an amendment to the Illinois Freedom to Work Act will take effect and impact all non-compete agreements entered into prospectively. The law will ban employers from using non-compete agreements with employees earning less than $75,000 and from using non-solicitation agreements with employees earning less than $45,000. The law will not affect non-disclosure agreements entered with employees, regardless of income level.

The law also requires an employer to provide a 14-day period to consider a non-compete or non-solicitation agreement and to advise the employee to consult with an attorney before entering into such an agreement.

Illinois’ new law continues a recent trend limiting the scope of restrictive covenants, including, for example, at the federal level and in the District of Columbia.

Employers should consult their Polsinelli attorney for assistance in reviewing and updating their template restrictive covenant agreements to ensure that after January 1, 2022 they enter enforceable agreements.