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New Changes to Illinois Non-Compete Clauses

On Behalf of | Oct 28, 2016 | Firm News

The state of Illinois has recently signed new legislation giving more rights to lower wage Illinois workers when they leave their jobs to seek employment elsewhere. On January 01, 2017, the Illinois Freedom to Work Act will go into effect, making non-compete clauses for low income workers illegal in the private sector.

The language of the law explicitly states employers may not enter into a “covenant not to compete with any low-wage employee of the employer.” The bill defines “covenant not to compete” as:

  • Any work for another employer for a specified period of time;
  • Any work in a specified geographical area; or
  • Work for another employer that is similar to such low-wage employee’s work for the employer included as a party to the agreement.

The Act further defines “low wage employee” as:

An employee who earns the greater of (1) the hourly rate equal to the minimum wage required by the applicable federal, state, or local minimum wage law or (2) $13.00 per hour.

Illinois public policy on non-compete clauses

The new law comes in the wake of the Illinois Attorney General filing lawsuits against Jimmy John’s sandwich shop for imposing two-year non-compete clauses on employees who make their sandwiches. Under those non-compete clauses, the low-wage earners could not work for any other sandwich shop within three-miles of a Jimmy John’s location.

The Illinois AG filed suit on behalf of the workers because of the state’s public policy on non-compete holds the agreements are only valid if they are “premised on a legitimate business interest and narrowly tailored in terms of time, activity and place.” The new law is an extension of this policy and helps to clarify some of the ambiguity about how these clauses can be constructed to comply with the law.

It should be noted that the Act does not mention limitations on other types of post-employment restrictions including non-disclosure and non-solicit agreements. Non-disclosure agreements would bar former employees from disclosing sensitive company information while non-solicitation clauses would prevent former employees from using sales lists or other customer information gathered by the previous employer in the pursuit of their own financial interests.

Reach out to us for help

If you have questions about state or local employment laws, contact us online or call our office at 312-332-6733 for a consultation about your case. The Chicago employment lawyers of Goldman & Ehrlich have years of experience helping both employers and workers with their employment issues.