Illinois Non-Compete Agreements: Major 2022 Reforms and Your Rights

Quick Answer: Illinois enacted major non-compete reforms effective January 1, 2022 under the Illinois Freedom to Work Act. Non-competes are now banned for employees earning under $75,000/year (increasing over time). Employers must provide 14 days to review and advise consulting an attorney. Non-competes cannot be enforced against workers laid off due to COVID-19 or similar circumstances. Illinois has become significantly more employee-friendly on non-competes.

Illinois has dramatically limited non-compete enforceability.

2022 Illinois Non-Compete Reforms

Illinois Freedom to Work Act

Major changes effective January 1, 2022:

• Income thresholds for enforceability
• Advance notice requirements
• Consideration requirements
• COVID-related limitations
• Attorney General enforcement

What Changed

Before 2022:

• Case-by-case enforceability analysis
• No specific income thresholds
• No notice requirements

After 2022:

• Clear income thresholds
• Mandatory notice periods
• Specific consideration requirements
• Banned for certain workers

Income Thresholds

Non-Compete Agreements

Cannot be enforced against employees earning:

• Less than $75,000/year (2022)
• Threshold increases over time

Schedule of increases:

• 2022: $75,000
• 2027: $80,000
• 2032: $85,000
• 2037: $90,000

Non-Solicitation Agreements

Separate threshold for non-solicitation:

• Less than $45,000/year (2022)
• Also increases over time

Schedule:

• 2022: $45,000
• 2027: $47,500
• 2032: $50,000
• 2037: $52,500

How Income Is Calculated

Includes:

• Salary or hourly wages
• Annualized earnings
• Based on expected earnings

Requirements for Enforceable Non-Competes

Adequate Consideration

Must provide:

• Two years of employment after signing, OR
• Other adequate consideration

Consideration examples:

• Continued employment for 2+ years
• Signing bonus
• Promotion
• Professional training

Advance Notice

Employer must:

• Provide agreement at least 14 days before start date
• Or 14 days before effective date
• Advise employee to consult attorney

Written Acknowledgment

Agreement should include:

• Employee's acknowledgment of advice to consult attorney
• Adequate time to review

Banned for Certain Workers

Low-Wage Workers

Non-competes banned for:

• Employees under income threshold
• Cannot be enforced even if signed

COVID-Related Separations

Cannot enforce non-compete if:

• Employee laid off due to COVID-19 pandemic
• Or "similar circumstances"
• Applies to covered employees

Certain Covered Employees

Additional protections may apply to:

• Workers under specific collective bargaining agreements
• Workers in certain industries with special protections

Legitimate Business Interest

Still Required

Even if income threshold met:

• Must protect legitimate business interest
• Reasonableness still analyzed

What Qualifies

Legitimate interests include:

• Trade secrets
• Confidential business information
• Substantial customer relationships
• Specialized training

What Courts Consider

Reasonableness factors:

• Geographic scope
• Time duration
• Scope of restricted activity
• Hardship on employee
• Effect on public

Time and Geographic Limits

Reasonable Duration

Generally enforceable:

• 1-2 years typical
• Longer periods face scrutiny
• Must match business interest

Geographic Scope

Must be reasonable:

• Related to actual work area
• Where employer does business
• Not broader than necessary

Non-Solicitation Agreements

Customer Non-Solicitation

Different from non-compete:

• Cannot solicit employer's customers
• Usually more enforceable
• Must meet $45,000 threshold

Employee Non-Solicitation

Restricts:

• Recruiting employer's employees
• May also face reasonableness analysis
• Subject to threshold requirements

Enforcement and Penalties

Attorney General Authority

Illinois AG can:

• Investigate violations
• Seek civil penalties
• Enforce the Act
• Recover for employees

Penalties

For violations:

• Up to $5,000 per violation
• Or $10,000 for pattern violations
• Plus actual damages
• Plus attorney's fees

Private Right of Action

Employees can:

• Sue to void unenforceable agreement
• Recover attorney's fees
• Seek injunctive relief

Challenging Non-Competes

Grounds to Challenge

Agreement may be unenforceable if:

• Below income threshold
• Inadequate consideration
• No 14-day notice given
• Unreasonable scope
• No legitimate business interest
• COVID-related separation

Burden of Proof

Employer must prove:

• Agreement is valid
• Meets all requirements
• Protects legitimate interest
• Is reasonable

Blue Penciling

Courts may:

• Modify overbroad provisions
• Or decline to enforce entirely
• Depends on circumstances

What to Do Before Signing

Review Carefully

Check:

• Your income against thresholds
• Whether adequate consideration provided
• Time and geographic restrictions
• Scope of restricted activities

Exercise Your Rights

Remember:

• You have 14 days to review
• You have right to consult attorney
• You can negotiate terms
• You can decline to sign

Get Legal Advice

Consider attorney for:

• High-income positions
• Broad restrictions
• Complex provisions
• Uncertainty about enforceability

What to Do If Subject to Non-Compete

Evaluate Enforceability

Consider:

• Were you under income threshold?
• Was consideration adequate?
• Was notice proper?
• Are terms reasonable?

Don't Assume It's Enforceable

Many non-competes are not enforceable:

• Especially under new law
• Challenge if appropriate
• Consult attorney

If Leaving Employment

Before taking new job:

• Review your agreement
• Assess enforceability
• Consider getting legal opinion
• Discuss with new employer

Common Scenarios

Scenario 1: Below Income Threshold

Situation: You earn $60,000/year and signed non-compete. Now changing jobs.

Analysis: Non-compete unenforceable. You're below $75,000 threshold.

Scenario 2: No 14-Day Notice

Situation: Employer presented non-compete on first day. No time to review.

Analysis: Requirement violated. May void agreement. Consult attorney.

Scenario 3: COVID Layoff

Situation: You were laid off during pandemic. Now employer threatens non-compete enforcement.

Analysis: Illinois law bans enforcement for COVID-related separations for covered employees.

Scenario 4: Signed Years Ago

Situation: You signed non-compete in 2019. Does new law apply?

Analysis: New law applies to agreements entered after January 1, 2022. Earlier agreements analyzed under prior law but may still be unenforceable.

Frequently Asked Questions

Are non-competes banned in Illinois?

Not entirely, but significantly limited. Banned for employees under $75,000/year and subject to many requirements.

What's the income threshold?

$75,000/year for non-competes; $45,000/year for non-solicitation. Thresholds increase over time.

Does the new law apply to old agreements?

The Freedom to Work Act applies to agreements entered on or after January 1, 2022. Earlier agreements governed by prior case law.

Can I negotiate my non-compete?

Yes. You have 14 days to review and can negotiate terms. Don't assume you must accept as presented.

What if I signed without the 14-day notice?

This may void the agreement. Consult an attorney about your specific situation.

Can my employer sue me for violating a non-compete?

Only if the agreement is enforceable. Many are not. Get legal advice before assuming obligation.

Related Topics

• Illinois Employment Law Hub
• Illinois At-Will Employment
• Illinois Severance Agreements
• Illinois Wrongful Termination

Take Action

Illinois has dramatically changed non-compete law. Know your rights:

1. Check your income against thresholds
2. Review agreements for required provisions
3. Exercise your 14-day review right
4. Consult an attorney for complex situations
5. Don't assume old agreements are enforceable
6. Challenge unenforceable restrictions

Non-competes aren't automatic in Illinois anymore.

Legal Disclaimer

This article provides general information about non-compete agreements in Illinois and is not legal advice. Every situation is different. For advice about your specific agreement, consult a licensed Illinois employment attorney.

For official information:

• Illinois Attorney General: https://www.illinoisattorneygeneral.gov
• Illinois Freedom to Work Act (820 ILCS 90)