Third in a series of alerts about recent changes in Illinois employment law
With federal regulations becoming stricter and the potential near erasure of non-competes under state laws such as that of New York, it is important to take a renewed look at legal requirements surrounding restrictive covenant agreements to ensure enforceability. In Illinois, new restrictions on employers went into effect in January 2022, limiting their ability to enter into new restrictive covenants with their employees, including covenants not to compete and covenants not to solicit. Gov. J. B. Pritzker amended the Illinois Freedom to Work Act (the Act) and clarified previously unclear provisions of the Act. The amendments also established new requirements for agreements with restrictive covenants and codified standards and restrictions applying specifically to non-solicitation covenants.
As background, the Illinois Freedom to Work Act of 2017 initially prohibited employers from entering into non-compete agreements with low-wage employees. “Low wage employees” were defined as employees whose earnings did not exceed the greater of the hourly rate equal to the minimum wage required by the applicable federal, state, or local minimum wage law or $13 per hour.
The new restrictions do away with the low-wage-employee requirement and invalidate and make unenforceable covenants not to compete unless the employee’s actual or expected annualized rate of earnings exceeds $75,000 per year as of January 1,...
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