What you need to know about the Prairie State’s latest updates to their “non-competition” and “non-solicitation” laws

Starting January 1, 2022, certain amendments to the Illinois Freedom to Work Act take effect, and the amendments pertaining to non-competition agreements and non-solicitation agreements are going to shake up the HR world. Many states, most notably California, have recently taken a hard stance against such restrictive covenants, and Illinois is following suit, but with its own twist.

While “non-competes” and “non-solicits” will still be permitted in select cases (i.e. agreements related to the purchase or sale of a business or ownership interest or where the Shalt Nots and Shalls below have been met), the landscape is most definitely changing. Failure to comply can result in the modification/voiding of your agreement, your payment of the employee’s attorney’s fees/damages in court, and even penalties if investigated by the Attorney General of up to $10,000 per violation.

The “Thou Shalt Nots”:

1. No non-competes with employees whose total actual or expected taxable annual compensation (including incentive compensation) is less than $75,000.
2. No non-solicits with employees whose total actual or expected taxable annual compensation is less than $45,000.
3. No non-competes or non-solicits with certain “union” employees.
4. No non-competes or non-solicits with employees terminated due to COVID-19.
5. No non-competes or non-solicits with employees in the construction industry.
6. No covenants that impose undue hardship on the employee or are injurious to the public.

The “Thou Shalls”:

1. Provide the employee at least 14 days to review the agreement.
2. Provide adequate consideration, unlike under Florida law; continued employment is NOT ENOUGH and an example provided by the statute is guaranteed employment for 2 years after signing the agreement.
3. Ensure any restriction is as narrowly-tailored as possible so that your legitimate business interests are protected but nothing more.
4. Advise your employee in writing to consult an attorney before signing.

The Moral of the Story

In an increasingly “remote” world, employees are joining teams from all over the world. It is essential that you consult with an attorney before using your templated employee on-boarding documents if you plan to hire an employee from out of state. Additionally, make sure to have your standard onboarding documents reviewed on a regular basis to ensure that you are staying up to date with employment law trends and legislation in your area.

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This blog was written by Hunter Business Law Associate Haley Lemon.

DISCLAIMER: This blog is for educational purposes only and does not offer nor substitute legal advice. Additionally, this blog does not establish an attorney-client relationship and is not for advertising or solicitation purposes. Any of the content contained herein shall not be used to make any decision without first consulting an attorney. The hiring of an attorney is an important decision not to be based on advertisements or blogs. Hunter Business Law expressly disclaims any and all liability in regard to any actions, or lack thereof, based on any contents of this blog.