Proposed amendments to the Illinois Freedom to Work Act (“IFWA”) will limit how employers can use non-competition and non-solicitation agreements. Under the proposed amendments, employers will be prohibited from entering into non-compete agreements with employees who earn less than $75,000 annually [which will increase by $5,000 every five years until 2037]. While the current IFWA is silent as to non-solicitation agreements, the new amendments will prohibit employers from entering into non-solicitation agreements with employees earning less than $45,000 annually [which would increase by $2,500 every year until 2037]. Both non-compete and non-solicitation agreements must be supported by adequate consideration. Additionally, the new amendments require employers to (1) provide an employee with at least 14 calendar days to review the agreements, which the employee may choose to waive; and (2) advise the employee in writing to consult with an attorney before entering into the agreement. Note that the new amendments do not place any restrictions on confidentiality or invention assignment clauses.
Although the amendments have not yet been enacted, and Governor Pritzker can still veto or recommend changes, Illinois employers are encouraged to review their form non-competition and non-solicitation covenants, as well as any agreements containing non-competition and non-solicitation clauses, prior to the proposed effective date of January 1, 2022 in order to avoid potential penalties ranging from $5,000-$10,000.
If you need assistance with your employee agreements in anticipation of the new IFWA amendments, please call us. We can help.
John D. Galarnyk, Esq.
Andrew J. Cunniff, Esq.
John A. Romanucci, Esq.