In January of this year, the Illinois Freedom to Work Act 820 ILCS 90/1 (“Act”) was amended. The recent amendment will have an effect on employer’s non-compete and/or non-solicitation agreements with their employees. Notably, the changes to the Act increased the minimum income level for covenants not to compete to be applicable, the inclusion of covenants not to solicit, and a revision to what is deemed “adequate consideration.”
Previously, the Act prohibited covenants not to compete for employees earning less than $13 per hour or minimum wage, whichever was greater. Now, the Act prohibits covenants not to compete with employees earning $75,000 or less, and covenants not to solicit with employees earning $45,000 or less. Moreover, the Act covers both covenants not to solicit the employer’s employees and not to solicit the employer’s actual or potential customers, clients, vendors, and suppliers.
Many employers question what is enforceable. To be enforceable, the Act requires that the covenants must be supported by adequate consideration, are no more restrictive than necessary for the employer’s legitimate business interest, and the employer must be advised to consult with an attorney if requested. Adequate consideration is satisfied if the employee works for two years or more after signing the agreement, or something else of reasonable value is provided. As to protecting the employer’s legitimate business interest, the Act is vague of this requirement. This is typically determined on a case-by-case basis. As to the requirement to consult with an attorney, and employee must be given at least (14) days.
Finally, many of our clients are signatories to Collective Bargaining Agreements. It is important to note that the Act states that “a covenant not to compete is void and illegal with respect to individuals covered by a collective bargaining agreement under the Illinois Public Labor Relations Act or the Illinois Educational Labor Relations Act and individuals employed in construction.” 820 ILCS 90/10 (d). That portion of the Act does not apply to construction employees who primarily perform management, engineering or architectural, design, or sales functions for the employer or who are shareholders, partners, or owners in any capacity of the employer. For those employees, the preceding paragraphs of this article would be applicable.