Are Non-Compete Agreements Still Enforceable Under New Illinois State Law?

As The Business Law Group, we represent businesses throughout the greater Chicago area in employment disputes, contract drafting, and litigation matters. One question we’ve been hearing more frequently is whether non-compete agreements are still enforceable in Illinois. Given the recent changes to state law, it’s a critical issue for employers across all industries. As The Chicago Business Lawyers®, we believe it’s important to explain what’s changed, what’s still enforceable, and how businesses can protect themselves moving forward.

Understanding The Amendments To The Illinois Freedom To Work Act

In 2022, Illinois amended the Freedom to Work Act (820 ILCS 90/1 et seq.), significantly changing the rules for non-compete and non-solicitation agreements. This law applies to all agreements entered into after January 1, 2022. The primary goal of the amendment was to ensure that such restrictive covenants are only used when reasonably necessary and not to unfairly restrict workers.

The most notable changes include:

• Non-compete agreements are now unenforceable for employees earning less than $75,000 annually.
• Non-solicitation agreements are unenforceable for employees earning less than $45,000 annually.
• Employers must give employees at least 14 days to review the agreement.
• The agreement must advise the employee, in writing, that they have the right to consult with an attorney before signing.

The law also codifies requirements previously developed under Illinois case law. That means the agreement must:

• Be supported by adequate consideration (typically at least two years of continued employment or some other valuable benefit);
• Be necessary to protect a legitimate business interest;
• Be reasonable in geographic scope, duration, and activity restrictions.

What Employers Need To Know About Enforceability

Under the amended statute, not every non-compete or non-solicit clause is invalid. But now, employers must be more precise and intentional in how they use them. Courts will scrutinize whether the agreement truly protects a legitimate interest, such as confidential information, trade secrets, or substantial client relationships.

The law does not ban restrictive covenants altogether. It allows them when they are narrowly tailored and used in appropriate contexts. For example, a well-drafted non-solicitation clause for a high-level sales executive who had access to confidential client lists may still be enforceable, so long as the salary threshold is met, the restriction is reasonable, and it complies with all necessary legal requirements.

Employers should also note that the law prohibits enforcement if an employee is terminated due to COVID-19 or similar public health circumstances, unless compensation is paid equal to the restriction period.

Steps Businesses Should Take Now

First, review your existing non-compete and non-solicitation agreements. If they were signed before January 1, 2022, they may still be valid, but courts could apply the new standards when evaluating them. Agreements signed after that date must meet the specific conditions outlined in 820 ILCS 90/1 et seq.

Second, revise your employment contracts to include income thresholds, notice periods, and clear statements about the employee’s right to legal counsel. Failure to include these could render the agreement void.

Third, focus on drafting strong confidentiality and intellectual property clauses. These provisions

remain enforceable and are often a more targeted way to protect sensitive business interests without overreaching.

Finally, consider whether your agreements truly reflect your business goals. A non-compete should never be used as a default clause. It should be purpose-driven, especially in light of the law’s evolving standards.

Frequently Asked Questions About Non-Compete Agreements In Illinois

What Income Levels Impact The Enforceability Of Non-Compete Agreements?

Employees earning less than $75,000 per year cannot be bound by a non-compete agreement under Illinois law. This threshold increases over time and is indexed to inflation.

Are Independent Contractors Covered By The New Illinois Law?

Generally, the Illinois Freedom to Work Act applies to employees, not independent contractors. However, courts will look at the substance of the working relationship. If someone is misclassified, the agreement may still be scrutinized under the Act.

Can I Still Use A Non-Solicitation Agreement?

Yes, but only if the employee earns at least $45,000 annually. Even then, the agreement must meet the same tests of reasonableness and legitimate business interest.

Does Continued Employment Still Count As Consideration For Signing A Non-Compete?

Yes, Illinois courts generally consider two years of continued employment as adequate consideration. However, a signing bonus or other financial benefit may also qualify.

What Happens If My Non-Compete Agreement Doesn’t Comply With The New Law?

If your agreement fails to meet the statutory requirements, it is likely to be unenforceable. This means a court may refuse to uphold it altogether, leaving your business without protection. That’s why it’s critical to update your agreements now.

Call The Chicago Business Lawyers® For Trusted Legal Guidance

At The Business Law Group, we understand how important it is to protect your business relationships, trade secrets, and long-term success. If you use non-compete or non-solicitation agreements, now is the time to ensure they comply with Illinois law.

Contact our Chicago non-compete agreement attorneys at the Business Law Group by calling (224) 353-6498 to receive your free consultation. We serve businesses of all sizes throughout the greater Chicago area. Let us help you protect your company the right way—legally and effectively.

The information contained in these blog entries and on this website does not constitute legal advice. While the content discusses various legal issues, it is not intended to and does not provide legal advice. If you are seeking legal advice, you should contact The Business Law Group at 224-353-6498 to schedule a consultation.