Drafting Enforceable Non-Compete Agreements Under the Illinois Freedom to Work Act
In Illinois, a non-compete agreement is only enforceable if the employee earns at least $75,000 annually. Employers must also provide the employee a 14-day review period and offer adequate consideration, which generally means two years of continuous employment or a significant financial bonus.
Protecting your company's proprietary information, client lists, and trade secrets is a top priority for any business. For years, employers in Illinois relied heavily on non-compete agreements to prevent departing employees from taking valuable knowledge to a competitor. However, the legal landscape has drastically shifted. With strict legislative updates to the Illinois Freedom to Work Act, the state has clamped down on overly broad restrictive covenants, making it much harder to enforce them.
If you operate a business in Chicago, Naperville, Rockford, or anywhere else in Illinois, using an outdated, generic non-compete template could render your entire agreement completely void. Worse, it could expose your company to investigations by the Illinois Attorney General's Office, Chicago and severe financial penalties. This guide will walk you through the essential steps and statutory requirements to draft an enforceable non-compete agreement under current Illinois law.
Core Requirements for Illinois Non-Competes
Drafting a valid restrictive covenant is no longer just about defining the geographic scope and time limit. Illinois law now dictates exactly who can be bound by these agreements and the procedural steps you must follow before they sign.
Exact Salary Thresholds for Enforcement
The most critical update to the 820 ILCS § 90/10 is the establishment of strict earnings thresholds. You cannot ask a low-wage worker to sign a non-compete. To enforce a non-compete agreement, the employee's annualized earnings must be at least $75,000. If you are drafting a non-solicitation agreement (which prevents them from poaching clients or other employees), the threshold is slightly lower, requiring annualized earnings of at least $45,000.
| Type of Restriction | Minimum Annualized Earnings | Targeted Activity |
|---|---|---|
| Non-Compete | $75,000 | Working for a direct competitor |
| Non-Solicitation | $45,000 | Poaching clients or staff |
The Mandatory 14-Day Review Period
Gone are the days of sliding a non-compete across the desk on a new hire's first day and demanding an immediate signature. Under Illinois law, employers must provide the employee with at least 14 calendar days to review the restrictive covenant before they are required to sign it. Additionally, the agreement must include a clear, written statement actively advising the employee to consult with an attorney. If you skip this 14-day waiting period or fail to include the written advisory, the agreement is generally considered legally void.
Consideration Requirements: The 2-Year Rule
In contract law, "consideration" means that an employee must receive something of value in exchange for signing away their right to compete. Illinois courts have uniquely strict rules regarding this. Following the landmark appellate decision in Fifield v. Premier Dealer Services, Inc., 993 N.E.2d 938 (IL Appellate Court 2013), simply offering a job is usually not enough unless the employee actually remains employed for a significant amount of time.
Generally, Illinois courts require at least two years of continuous employment after the agreement is signed to constitute adequate consideration. If you fire the employee after six months, the non-compete will likely be thrown out. If you cannot guarantee two years of employment, you must offer alternative consideration. This often takes the form of a financial bonus, additional paid time off, or stock options provided specifically in exchange for signing the agreement.
Industry Exemptions in Illinois
Even if an employee meets the $75,000 salary threshold, certain industries are entirely exempt from non-compete agreements due to public policy concerns. You cannot enforce a non-compete against:
- Nurses and Healthcare Workers: Most registered nurses and certified nursing assistants who are placed by staffing agencies are exempt to ensure healthcare facilities have access to necessary staff.
- Construction Workers: Under 820 ILCS § 90/10(e), restrictive covenants are void for individuals employed in construction regardless of whether they are covered by a collective bargaining agreement, except for those performing primarily management, engineering, architectural, design, or sales functions.
- Broadcasters: Television and radio broadcasters are shielded from non-competes, allowing them to freely move between local stations.
Costs and Legal Penalties
If you attempt to enforce an illegal non-compete agreement in a court like the Circuit Court of Cook County, Chicago or the Circuit Court of Peoria County, Peoria, you face steep consequences. Not only will the judge strike down the agreement, but the 820 ILCS § 90/25 requires the employer to pay all of the employee's reasonable attorney's fees and court costs if the employee prevails.
Because drafting these agreements requires precision, businesses should seek professional legal help. You can browse our directory of vetted US Lawyers to find an experienced Illinois employment attorney to audit and draft your corporate documents properly.
Frequently Asked Questions (FAQ)
Can an employee waive the 14-day review period?
Yes, an employee can voluntarily choose to sign the agreement before the 14-day period expires, but the employer must officially offer the full 14 days and document that offer in writing.
Does the salary threshold include bonuses or just base pay?
The threshold is based on annualized earnings, which generally includes salary, earned bonuses, commissions, and other taxable compensation as reported on a W-2.
Will a judge fix my non-compete if it is too broad?
While Illinois courts have the power to blue-pencil or reform an overly broad contract, they are increasingly refusing to do so if the original draft was severely overreaching or unfair to the worker.
Are confidentiality agreements subject to the $75,000 threshold?
No. Standard confidentiality agreements and agreements protecting trade secrets do not fall under the strict salary thresholds applied to non-compete and non-solicitation clauses.
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