Effective on January 1, 2022, the State of Illinois amended its Freedom To Work Act to limit the ways employers can enforce non-compete and non-solicitation agreements with current or former employees.
The amendment prohibits employers from entering into non-competition agreements unless the employee’s actual/expected earnings are greater than $75,000.00 a year. It further prohibits non-solicitation agreements (approaching employees by a former employee), when an employee’s actual/expected yearly pay exceeds $45,000.00 a year.
These threshold amounts are also to be increased $5,000.00 for non-competition agreements and $2,500.00 for non-solicitation agreements every 5 years until 2037.
The amendment also voids any non-competition and non-solicitation agreements, and makes any such agreements illegal, for employees terminated for reasons relating to COVID-19. Certain public employees and others under certain employment contracts could also have their non-competition and non-solicitation agreements voided.
In addition to these protections, for a non-competition/solicitation agreement to be considered legal, employers must clear these additional hurdles:
- Employers must have an employee work for them for two years after signing an agreement, or the employee must be given “adequate consideration”, meaning a period of employment alongside benefits, or just benefits, which should be considered equal for the agreement;
- The agreement should also be considered “necessary” for the employment relationship;
- The agreement is actually in the interest of the employer;
- The agreement doesn’t cause undue hardship for the employee;
- The agreement is not harmful to the public as a whole.
The amendment also requires employers to recommend (in writing) that an employee consults an attorney before signing an agreement, and that the employee is given at least 14 days to consider the contract before signing (although they may sign before an assigned date).
Finally, the amendment forces employers to pay all costs and reasonable attorney’s fees if the employee prevails in a dispute regarding an agreement, and gives the Illinois Attorney General the authority to initiate or intervene into certain agreements and provide solutions and/or penalties if an agreement violates the Freedom To Work Act.
If you would like to learn more about non-compete and non-solicitation agreements, please contact one of the attorneys at McCarthy, Callas & Feeney, P.C. at 309-788-2800.