New Law in Illinois Prohibits Non-Compete Agreements For Low Wage Employees

boznos law office naperville il

In a first of its kind measure designed to free low wage earners from undue restrictions in finding other jobs in their field, Illinois has just passed a new law called the Illinois Freedom to Work Act (the “Act”). The Act will go into effect on January 1, 2017.

Restrictive covenants (most commonly referred to as “Non-Compete Agreements) have been used by employers in order to prevent employees from leaving the company and then going to work for a direct competitor. The theory was/is that the former employee may cause an unfair tipping of competitive advantage and utilize competitive information to harm the former employer.

Illinois new law applies only to “low wage” employees, who are defined as those earning the greater of:

  • $7.25/hour (Federal minimum wage); orillinois new law
  • $8.25/hour (Illinois minimum wage); or
  • $10.50/hour (Current minimum wage in City of Chicago); or
  • $13.00/hour

Under the new law, covenants not to compete for low wage employees are prohibited where they prohibit a low wage employee from: (a) working for another employer for a specified period of time; (b) working in a specified geographical area; or ( c) engaging in similar work for another employer.

Very significantly, the new Act does not prohibit an employer from enforcing agreements to protect confidential information and trade secrets. Additionally, the Act does not restrict an employer from placing prohibitions on a former employee’s ability to solicit otherwise protected business relationships (i.e. solicitation of former customers or employees).

The Illinois law is in direct response to a growing trend to protect low wage employees from being able to secure new employment. For years, fast food sub shop Jimmy Johns required its employees who made sandwiches, to sign non-compete agreements. Jimmy Johns ultimately did not enforce the agreements, but many former employees may have felt trapped in their future job searches. Jimmy Johns was sued for deceptive trade practices and ultimately settled. Additionally, the Obama administration has been increasingly critical of restrictive covenants finding them to be an impediment to business.

Under the new Illinois Act, an employee is able to petition the courts for declaratory relief when there is a judiciable controversy over their own non-compete agreement.

With over 30 years’ experience in advising employers and employees on workplace issues, let Boznos Law work with you to ensure you are ready to meet the challenges posed by the changes to the overtime laws. Call Bill Boznos today at (630) 375-1958 or contact us at www.boznoslawoffice.com/contact-us through our website.

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