Illinois Salary Thresholds for Enforceable Non-Compete Agreements
To legally enforce a non-compete in Illinois, your annualized earnings must be at least $75,000. For a non-solicitation agreement, you must earn at least $45,000 per year. If you earn less, the contract is automatically void.
For decades, fast-food chains, retail stores, and warehouse operators forced lower-wage workers to sign restrictive covenants, trapping them in low-paying jobs. The state recognized this as unfair and passed sweeping reforms. Today, the law completely bans non-compete and non-solicit agreements for workers who do not meet strict salary thresholds. Whether you work in a corporate office in Chicago or a manufacturing plant in Peoria, understanding these income floors is essential. If you believe your contract is invalid due to your salary, you can find a local Illinois employment attorney in our directory to help you move to a new job freely.
Understanding the Illinois Freedom to Work Act Minimums
The rules governing income limits are outlined in the 820 ILCS 90/10. The statute explicitly states that no employer shall enter into a covenant not to compete with any employee unless the employee's actual or expected annualized rate of earnings exceeds $75,000. Additionally, a covenant not to solicit (which prevents you from poaching clients or coworkers) requires an annualized earning rate of at least $45,000. If your salary falls below these numbers, the document you signed is legally void and unenforceable in local courts like the Circuit Court of Cook County, Chicago or the Winnebago County Circuit Court, Rockford.
Do Bonuses and Commissions Count Toward the Threshold?
A common question from salespeople and hourly workers is whether their base salary is the only number that matters. Under the 820 ILCS 90/5, the 'annualized rate of earnings' is defined broadly. It includes not only your base salary or hourly wages but also earned bonuses, commissions, tips, and any other compensation reported on your IRS Form W-2. Therefore, if your base salary is $60,000, but you consistently earn $20,000 in sales commissions, your total annualized earnings of $80,000 would place you above the legal threshold, making the non-compete potentially valid.
What Happens if My Salary Drops Below $75k?
Because the law looks at your actual 'annualized rate of earnings,' fluctuations in your income can affect the validity of the contract. If your expected earnings were $80,000 when you signed, but due to severe commission cuts or reduced hours, your final W-2 shows you only earned $65,000 during your final year of employment, the non-compete is generally unenforceable. Courts measure your earnings to ensure you truly met the threshold required to justify the restriction on your future livelihood.
How Thresholds Automatically Increase Every 5 Years
The Illinois legislature designed the law to keep pace with inflation. The $75,000 (non-compete) and $45,000 (non-solicit) minimums were set when the amendments took effect in January 2022. The statute mandates that these thresholds will automatically increase every five years. On January 1, 2027, the non-compete threshold will jump to $80,000, and the non-solicit threshold will jump to $47,500. This built-in escalator ensures that the protections for middle-class workers in cities like Aurora and Springfield do not erode over time.
Defending Against an Invalid Contract
If an employer attempts to sue a low-wage worker in a venue such as the Sangamon County Circuit Court, Springfield over a void non-compete, the employee can easily have the case dismissed based on the statutory income limits. Furthermore, the Illinois Attorney General's Office, through the Illinois Attorney General's Workplace Rights Bureau, Chicago, actively investigates and penalizes companies that systematically force low-wage workers into illegal restrictive covenants.
Frequently Asked Questions (FAQ)
Does the salary threshold apply to independent contractors (1099 workers)?
No. The Illinois Freedom to Work Act specifically defines 'employee' for these salary thresholds. Independent contractors are generally governed by different commercial contract standards, meaning the strict $75,000 threshold does not automatically apply to them.
What if I only worked there for three months and made $20,000?
The law looks at your 'annualized' rate of earnings. If you earned $20,000 in three months, your annualized rate would project out to $80,000 for the year, meaning you technically meet the threshold, though other rules (like the two-year continuous employment rule) might still invalidate the contract.
Can an employer promise to pay the difference to make the contract valid?
No. An employer cannot retroactively 'top up' your salary after you resign just to hit the $75,000 threshold and trigger the non-compete. The earnings must be genuine compensation for your work.
Are confidentiality agreements subject to the $75,000 limit?
No. Confidentiality agreements and non-disclosure agreements (NDAs) protecting trade secrets are exempt from the salary thresholds. An employer can require a worker earning any amount to keep company secrets private.
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