Client Alerts / 09.07.2016

Attention Illinois Employers: Law Bans Non-Compete Agreements with Low Wage Employees

Illinois has adopted a new statute called the Illinois Freedom to Work Act.  The statute prohibits private sector employers from entering into non-compete agreements, which the law defines as a “covenant not to compete,” with low wage employees.  It defines a low wage employee as someone who earns the greater of (i) the minimum wage, as set by federal, state or local law, or (ii) $13.00 per hour.  A “covenant not to compete” is defined as an agreement between an employer and a low wage employee that restricts the employee from performing any work for another employer for a specified period of time, in a specified geographical area, or that is similar to the work he/she performs for the employer.

The new law becomes effective on January 1, 2017.  It only applies to non-compete agreements that are entered into after that date.

The Illinois Freedom to Work Act does not mention agreements providing for the protection of confidential information or trade secrets.  As a result, those agreements remain valid and enforceable, for all employees.

For more information please contact Alan M. Rauss at amr@kjk.com or Robert S. Gilmore at rsg@kjk.com.

non-compete agreements non-compete agreements