Strategies For Enforcing Illinois Non-Compete Clauses
Non-compete agreements are a crucial tool for businesses looking to protect their trade secrets, client relationships, and competitive advantage. However, enforcing these agreements in Illinois requires careful planning and compliance with state law. Illinois courts have established clear guidelines on what makes a non-compete clause enforceable, and businesses must ensure their agreements are structured to withstand legal challenges. As The Chicago Business Lawyers®, our legal professionals help businesses of all sizes in the greater Chicago area draft, review, and enforce non-compete agreements to safeguard their interests.
Understanding Illinois Non-Compete Laws
Under 820 ILCS 90/1 et seq., the Illinois Freedom to Work Act places specific restrictions on non-compete agreements. Recent amendments, effective January 1, 2022, prohibit employers from enforcing non-compete clauses against employees earning less than $75,000 per year. Additionally, the law bans non-solicitation agreements for employees earning less than $45,000 annually. These thresholds will increase every five years through 2037.
Illinois courts evaluate non-compete clauses based on reasonableness and legitimate business interests. A restrictive covenant must be:
- Necessary to protect a legitimate business interest;
- Limited in geographic scope and duration;
- Not unduly burdensome on the employee; and
- Not harmful to public policy.
Key Strategies For Enforcing Non-Compete Clauses
1. Draft Clear And Narrowly Tailored Agreements
Illinois courts disfavor overly broad non-compete agreements. To improve enforceability, agreements should specify:
- The exact activities that are restricted;
- A reasonable geographic area (e.g., a specific city or county rather than an entire state); and
- A reasonable duration, typically six months to two years.
Non-compete clauses that attempt to restrict an employee indefinitely or across broad territories often fail in court. The narrower and more specific the restriction, the more likely it is to be upheld.
2. Ensure Adequate Consideration
To be enforceable, a non-compete agreement must be supported by adequate consideration. Illinois courts have ruled that employment alone is not always sufficient consideration unless the employee remains with the company for at least two years. Alternatively, businesses can provide additional consideration, such as:
- A signing bonus;
- Increased salary or benefits; and/or
- Access to confidential business information.
Providing clear and valuable consideration ensures the agreement is legally binding and difficult to challenge.
3. Protect Trade Secrets And Confidential Information
One of the strongest justifications for a non-compete clause is protecting trade secrets and confidential business data. Employers should ensure their agreements align with the Illinois Trade Secrets Act (765 ILCS 1065/1 et seq.), which defines trade secrets as information that:
- Derives economic value from not being generally known; and
- Is subject to reasonable efforts to maintain secrecy.
Companies should implement strong internal protections, such as confidentiality agreements and access restrictions, to reinforce the necessity of a non-compete.
4. Enforce Non-Solicitation Clauses
While non-compete clauses face strict scrutiny, non-solicitation agreements are more likely to be upheld. These agreements can help prevent former employees from soliciting:
- Customers or clients they worked with during employment;
- Other employees to leave the company; and/or
- Vendors or suppliers that are crucial to business operations.
A well-crafted non-solicitation agreement can provide robust protections without running afoul of Illinois non-solicitation laws.
5. Take Legal Action When Necessary
If an employee violates a non-compete clause, employers may seek legal remedies, including:
- Injunctions to prevent further violations;
- Monetary damages for business losses; and
- Legal fees and court costs if the agreement includes a fee-shifting provision.
Illinois courts consider multiple factors when determining whether to enforce a non-compete, including the impact on the employee’s ability to earn a living and whether the employer has suffered demonstrable harm.
Illinois Non-Compete Agreement Frequently Asked Questions
What Makes A Non-Compete Agreement Unenforceable In Illinois?
A non-compete agreement may be unenforceable if it is overly broad, lacks adequate consideration, is not necessary to protect a legitimate business interest, or places an unreasonable burden on the employee. Agreements that restrict employees from working in an entire industry or across large geographic areas often fail in court.
Can A Non-Compete Agreement Be Enforced If An Employee Is Fired?
Yes, but enforcement depends on the circumstances. If the employer terminates the employee without cause, Illinois courts are less likely to uphold the agreement. If the termination is due to misconduct or breach of contract, enforcement may be more likely.
What Happens If An Employee Violates A Non-Compete Clause?
If an employee breaches a valid non-compete agreement, the employer can seek an injunction to stop the violation and may sue for damages. Employers must demonstrate that the breach caused harm to their business.
Can Non-Compete Agreements Apply To Independent Contractors?
Yes, but courts apply similar reasonableness standards. The agreement must protect a legitimate business interest, and the restrictions must be narrowly tailored. Courts may scrutinize these agreements more closely for independent contractors than for full-time employees.
Are Non-Compete Agreements Enforceable Against Low-Wage Employees?
No, under 820 ILCS 90/1 et seq., non-compete agreements are prohibited for employees earning less than $75,000 per year, and non-solicitation agreements are banned for employees earning less than $45,000 per year.
How Can A Business Improve The Enforceability Of A Non-Compete Agreement?
Businesses can improve enforceability by ensuring agreements are narrowly tailored, offering additional consideration (such as bonuses or promotions), protecting trade secrets, and enforcing non-solicitation clauses instead of broad non-compete terms.
Call Our Chicago Business Non-Compete Agreement Attorneys For A Free Consultation
Non-compete agreements are essential for protecting business interests, but enforcement requires careful legal strategy. At the Business Law Group, our business law attorneys help businesses draft, review, and enforce restrictive covenants that comply with Illinois law. Whether you need to update your agreements or take legal action against a violation, our experienced attorneys are here to assist.
Contact our Chicago non-compete 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 and are committed to protecting your competitive edge. Let us help you focus on growing your business while we handle the complexities of the law.
