New Illinois law bans noncompetition agreements for low-wage workers

by Steven L. Brenneman

The Illinois Freedom to Work Act, which will ban noncompetition agreements for low-wage private-sector employees, goes into effect on January 1.

The law defines a “low-wage employee” as an employee who earns the greater of the applicable federal, state, or local minimum wage or $13 per hour. Therefore, the law initially will apply to noncompetition agreements with employees earning $13 per hour or less.

The law defines “covenant not to compete” broadly to mean an agreement between an employer and a low-wage employee that restricts the employee from performing:

  1. Any work for another employer for a specified period of time;
  2. Any work in a specified geographic area; or
  3. Work for another employer that is similar to the low-wage employee’s work for the employer in question.

In addition to prohibiting employers from entering into such agreements after January 1, the law provides that all such existing agreements between a private-sector employer and a low-wage employee will be “illegal and void.”

The new law doesn’t apply to covenants restricting the solicitation of customers or employees. Nor does it address or curtail other common postemployment restrictions such as nondisclosure agreements.

For more information on the new law on restrictive covenants, see the September issue of Illinois Employment Law Letter.

Steven L. Brenneman is an attorney with Fox, Swibel, Levin & Carroll, LLP, in Chicago. He can be reached at sbrenneman@foxswibel.com.

About Illinois Employment Law Letter:
Excerpted from Illinois Employment Law Letter, and written by attorneys at Fox, Swibel, Levin & Carroll, LLP. ILLINOIS EMPLOYMENT LAW LETTER does not attempt to offer solutions to individual problems but rather to provide information about current developments in Illinois employment law. Questions about individual problems should be addressed to the employment law attorney of your choice.
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