What Illinois Employers Should Know About Non-Compete And Non-Solicitation Agreements
Non-compete and non-solicitation agreements are common tools used by Illinois employers to protect confidential information, goodwill, and key relationships. At the same time, Illinois law imposes real limits on when and how these agreements can be enforced. Courts look closely at fairness, scope, and how the agreement affects an employee’s ability to work. As The Chicago Business Lawyers®, we help businesses of all sizes in the greater Chicago area structure agreements that protect legitimate interests while complying with current Illinois statutes and case law.
Illinois has updated its laws in recent years, and employers must pay close attention to these changes. Well-drafted agreements can deter unfair competition and provide important leverage in disputes. Poorly drafted agreements can be struck down, expose a company to litigation risk, or invite scrutiny from regulators. Our team at The Business Law Group focuses on clear, practical agreements that reflect business reality rather than boilerplate language.
Understanding The Illinois Freedom To Work Act
The primary law governing restrictive covenants with employees in Illinois is the Illinois Freedom to Work Act, codified at 820 ILCS 90 et seq. Amendments that took effect in 2022 significantly changed how courts evaluate non-compete and non-solicitation agreements. Among other things, the statute sets minimum earnings thresholds for enforceability and requires certain notices to employees.
Under 820 ILCS 90/10 et seq., non-compete agreements and other restrictive covenants are generally prohibited for employees who earn below a statutory earnings level that is adjusted over time. There is a separate threshold for non-solicitation agreements involving customers or employees. Employers must also give employees notice and an opportunity to consult with counsel before signing. These statutory requirements operate alongside long-standing common law rules about reasonableness, geographic scope, and duration.
What Makes A Non-Compete Enforceable In Illinois
Illinois courts do not automatically enforce non-compete agreements. To be enforceable, a restrictive covenant must be:
- Supported by adequate consideration
- No greater than necessary to protect a legitimate business interest
- Not unduly harsh to the employee
- Not harmful to the public
Legitimate business interests can include confidential information, trade secrets, customer relationships developed by the employer, and long-term client relationships. Courts closely examine the facts of each case, including the type of job, the length of the restriction, and the nature of the business.
Consideration is also critical. Continued employment for a substantial period of time can sometimes qualify, but many employers now provide signing bonuses, promotions, or other benefits to avoid disputes about whether consideration is adequate.
Non-Solicitation Agreements And Customer Relationships
Non-solicitation agreements are often more likely to be enforced than broad non-compete clauses. These agreements do not bar an employee from working in the same field. Instead, they limit the solicitation of certain customers, vendors, or employees for a defined period of time.
Under 820 ILCS 90 et seq., non-solicitation agreements must still be reasonable and tied to legitimate interests. Illinois courts examine whether the employer has invested in developing relationships that warrant protection and whether the limitations are targeted rather than sweeping. Overbroad restrictions that cover all potential customers worldwide or that last for many years are less likely to be upheld.
For many Illinois employers, carefully drafted non-solicitation provisions provide strong and balanced protection without the litigation risks that sometimes arise from broad non-competes.
Protecting Trade Secrets And Confidential Information
Even without a non-compete clause, employers can protect trade secrets through separate agreements and existing statutes. The Illinois Trade Secrets Act, 765 ILCS 1065 et seq., provides remedies when someone misappropriates trade secrets such as formulas, processes, pricing strategies, or confidential customer lists. Non-disclosure agreements are often used together with non-solicitation clauses to create layered protection.
We counsel employers to clearly identify categories of confidential information, limit access on a need-to-know basis, and use consistent written policies. Those practical steps strengthen enforceability if litigation becomes necessary.
Drafting Agreements After The 2022 Changes In Illinois Law
The 2022 amendments to 820 ILCS 90 et seq. did more than change earnings thresholds. They reflect a broader policy trend toward narrowing restrictive covenants. The statute encourages courts to consider fairness and proportionality. It also authorizes courts to reform or “blue pencil” overbroad agreements in some situations, although employers should not rely on courts to fix poor drafting.
We work with clients to:
- Identify real business interests worth protecting.
- Tailor restrictions to specific roles or departments
- Set realistic time and geographic limits.
- Provide appropriate consideration
- Include required statutory notices.
A one-size-fits-all agreement copied from another state or downloaded online can create more risk than protection. Illinois law is distinct, and local experience matters.
Risks Of Non-Compliance For Employers
Ignoring Illinois statutory requirements can expose employers to serious consequences. Under 820 ILCS 90/25 et seq., employees may recover attorneys’ fees if an employer tries to enforce an unenforceable covenant in bad faith. Overreaching agreements can also damage morale or make it harder to recruit talent. Thoughtful drafting that balances protection with fairness is often the best long-term strategy.
Illinois Non-Compete And Non-Solicitation Frequently Asked Questions
What Is The Difference Between A Non-Compete And A Non-Solicitation Agreement?
A non-compete agreement restricts an employee from working for a competitor or starting a competing business for a period of time after leaving employment. A non-solicitation agreement, by contrast, focuses on limiting solicitation of customers, clients, or employees. Illinois law tends to scrutinize non-competes more heavily, while non-solicitation agreements are often viewed as narrower and more reasonable when properly drafted.
Are Non-Compete Agreements Legal In Illinois?
Yes, but they are limited by statute and case law. Under 820 ILCS 90 et seq., non-compete agreements are prohibited for employees who earn below certain statutory thresholds. Even when allowed, the agreement must be reasonable and protect a legitimate business interest. Courts evaluate scope, duration, geography, and the nature of the business to determine whether enforcement is fair.
What Earnings Levels Apply To Enforceable Agreements?
The Illinois Freedom to Work Act sets minimum earnings thresholds that change over time. Non-compete agreements are generally unenforceable for workers earning below that statutory level. A different level applies to non-solicitation agreements. Because these amounts can change, employers should review agreements regularly and update onboarding procedures to stay in compliance.
Can Illinois Courts Modify Overbroad Restrictive Covenants?
Illinois courts have authority under 820 ILCS 90 et seq. to reform overbroad agreements in some situations. However, courts are not required to fix poorly drafted contracts. Employers should not assume a judge will rewrite an agreement to make it enforceable. The better strategy is to ensure that restrictions are reasonable from the outset.
Do Independent Contractors Fall Under The Same Rules?
Some provisions of Illinois law apply to both employees and independent contractors, but the analysis can differ based on the structure of the relationship. Courts will look at actual working conditions, not just labels used in a contract. Employers should obtain legal advice before imposing non-compete or non-solicitation restrictions on contractors because misclassification issues can add additional risk.
What Steps Should Employers Take Before Asking Employees To Sign?
Employers should confirm that the agreement is necessary for the specific role, provide adequate consideration, and allow the employee time to review and consult counsel. The agreement should be written in clear language and tailored to the company’s operations. We also recommend reviewing existing agreements during promotions, role changes, or acquisitions.
Call The Business Law Group For Exceptional Legal Guidance
Non-compete and non-solicitation agreements can be powerful tools when they are drafted with care and consistent with Illinois law. Our team at The Business Law Group, known as The Chicago Business Lawyers®, works closely with employers to protect confidential information, retain key relationships, and reduce litigation risk.
For advice on drafting, reviewing, or enforcing restrictive covenants, contact our Chicago non-compete attorneys at the Business Law Group by calling (224) 353-6498 to receive your free consultation. We proudly assist businesses of all sizes throughout the greater Chicago area and are ready to help structure agreements that align with both legal requirements and practical business goals.
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.
