Illinois Freedom to Work Act – Are Non-Competes On Their Way Out?

In 2022, Illinois significantly restricted the use of non-compete agreements with the passage of the Freedom to Work Act. The Act prohibits non-compete agreements for workers earning less than $75,000 per year (adjusted upwards every five years, capped at $90,000 per year beginning on January 1, 2037), prohibits non-solicitation agreements for workers earning less than $45,000 per year (again, adjusted every five years), requires certain notices to accompany non-competition and non-solicitation agreements, and restricts the use of such agreements for many COVID-related layoffs and for most construction workers and for public workers or educators covered by collective bargaining agreements.

The Act also adopted the reasonableness test used by courts to determine if non-competition agreements are enforceable. This included specifying that such agreements must be accompanied by “adequate consideration,” which means continued employment for at least two years after the employee signs an agreement, or the employer giving the worker additional professional or financial benefits to sign. The Act also provided for attorneys’ fees remedies for workers who prevail on non-competition or non-solicitation claims brought by their former employers and empowered Judges to reform problematic non-competition and non-solicitation provisions.

In January 2023, the Federal Trade Commission (FTC) announced that it may ban the use of non-competition agreements altogether, nationwide. The FTC’s proposed rule would prohibit employers from entering into or enforcing non-compete agreements with employees, regardless of their salary or position. The FTC argues that non-compete agreements stifle competition and innovation, and deprive workers of higher wages and better working conditions.

The changes to non-compete agreements in Illinois and the proposed FTC ban are good news for workers. Non-compete agreements can prevent workers from taking better-paying jobs or starting their own businesses. By restricting the use of non-compete agreements, Illinois and the FTC are making it easier for workers to advance their careers and improve their lives.

If you are an employee in Illinois, you should be aware of the restrictions on non-compete agreements. If you are asked to sign a non-compete agreement, you should review it carefully with an attorney before signing. Emery Law’s Ethan White is an employment attorney who regularly counsels employees presented with restrictive covenants, including non-compete agreements. Ethan has more than a decade of pure litigation experience, primarily focusing on employee-side employment disputes, including discrimination, wage and hour, and retaliation.  If you are dealing with workplace issues, you need an employment lawyer who will explain your rights.