Illinois recently passed legislation amending the Freedom to Work Act (the “Act”), following a growing trend of states imposing greater restrictions on employers’ use and enforcement of non-competition and non-solicitation covenants.
On January 1, 2022, SB 672 took effect, clarifying ambiguities in the original Act and levying additional requirements on Illinois employers who seek to impose and enforce restrictive covenants. The bill’s new provisions and restrictions apply only to employer-employee agreements entered on or after January 1, 2022; the bill is not retroactive.
The original Act, effective January 1, 2017, generally prohibited employers from requiring “low-wage employees” to enter into “covenants not to compete.” The Act defined “low-wage employee” as any employee earning less than (1) the applicable federal, state or local hourly minimum wage, or (2) $13.00 per hour, whichever was greater.
SB 672 clarifies and modifies this key provision. As written, the original Act did not specify whether its restrictions extended to non-solicitation agreements. SB 672 clarifies that the Act explicitly includes non-solicitation covenants. Thus, SB 672’s restrictions apply with equal force to agreements prohibiting the solicitation of customers, vendors and employees. Conversely, SB 672 explains that “covenants not to compete” do not include confidentiality or non-disclosure agreements, trade secret protection agreements, or agreements entered into in connection with...
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