Illinois Governor Signs New Non-Compete Bill

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The Illinois General Assembly passed a major bill in May that significantly alters how and when employers can use restrictive covenants with Illinois employees.  Illinois Governor JB Pritzker signed the bill into law on August 13, 2021, and it will go into effect January 1, 2022.

We provided details and analysis on the new law here.  At a high level, the new law: (a) prohibits the use of non-compete agreements with employees paid less than $75,000 per year; (b) prohibits non-solicitation agreements for employees paid less than $45,000 per year; and (c) codifies the rule under Fifield and Enterprise Financial Group, Inc. v. Premier Dealer Services, Inc., 373 Ill. Dec. 379, 993 N.E. 2d 938 (Ill. App. Ct. 2013), requiring employers to provide employees with “at least two years or more of continued employment” as consideration for signing a restrictive covenant, if at-will employment alone (as opposed to some other “professional or financial benefits”) is the consideration for the agreement. The law also requires employers to advise employees in writing to seek attorney consultation and provide at least 14 calendar days to review the agreement before signing.

Illinois employers are encouraged to review their current restrictive covenant agreements and bring them into compliance before the January 1, 2022 effective date of the amendments.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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