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Major Changes Coming to Non-Compete/Non-Solicitation Restrictive Covenants in Illinois
On August 13, 2021, Governor J.B. Pritzker signed into law major amendments to the Illinois Freedom to Work Act which will become effective January 1, 2022.
What is covered:
Employment agreements with non-compete and non-solicitation covenants signed after January 1, 2022.
New Salary Requirements:
- Prohibits non-competes with employees earning less than $75,000 per year.
- Prohibits non-solicits with employees earning less than $45,000 per year.
NOTE: the salary requirements will automatically increase every five years under this law.
The new law requires “adequate consideration” for the non-compete and/or non-solicit in order to be enforceable. Adequate consideration is defined as follows:
- The employee worked for the employer for at least two years after signing the agreement; or
- The employer provided period of employment plus additional professional or financial benefits or such benefits adequately by themselves.
The written agreement must include:
- The opportunity to consult with an attorney before signing.
- At least 14 calendar days for employee to review. This can be voluntarily waived in writing.
Remedies Under the Law:
- Statutory right to recover attorney fees if the employee prevails in an employment lawsuit;
- The Attorney General is empowered to investigate and take action against employers who violate this amended law.
These aggressive amendments/requirements on non-competes and non-solicits may be the result of the use of these restrictive covenants with low wage earners. Arguably, these changes may make non-compete and non-solicitation agreements more enforceable by the Courts because it eliminates prior problems with such agreements.
In view of these new restrictions, Illinois employers should be sure to seek advice of legal counsel for a legal review and update of their current templates for these restrictive covenants.
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