Illinois Enacts Sweeping Reforms to Non-Compete and Non-Solicit Agreements—What All Employers Need To Know
June 21, 2021
Authored by: Patrick DePoy and Bill Wortel
The Illinois General Assembly has enacted sweeping changes to the Illinois Freedom to Work Act, 820 ILCS § 90, et seq. (the “Act”), which will limit the use of covenants not to compete (“non-competes”) and covenants not to solicit (“non-solicits”) in employment agreements to employees earning more than certain compensation thresholds established by the amendments to the Act. The amendments to the Act also impose certain additional procedural requirements on employers utilizing non-competes and non-solicits. Senate Bill 672 (“SB 672”) passed unanimously in the Illinois House and Senate, and Governor J.B. Pritzker is expected to sign the bill.
Here’s what employers need to know.
- Do the changes in SB 672 impact existing employment agreements containing restrictive covenants?
No. SB 672 applies to non-competes and non-solicits entered into after January 1, 2022. Employers should review any form and/or template agreements to ensure compliance going forward, but need not make changes to agreements entered into before January 1, 2022, in order to comply with the Act. That said, if employers are considering revising their restrictive covenant forms, they should begin that process now, especially if they intend to ask existing employees to sign new forms prior to January 1,