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New Illinois Bill May Alter Non-Compete and Non-Solicitation Law In Employee Agreements
In recent years, employers have significantly expanded their use of non-compete agreements, whereby employees are prohibited from competing with their employer for a certain amount of time after they leave their job. Many states, including New York, disfavor non-competes because they may prevent an employee from earning a living in their chosen field. Generally, non-compete agreements must be narrowly drawn and must protect a legitimate interest of the employer, among other things.
The Illinois General Assembly recently approved a bill that would significantly reform non-compete and non-solicitation law in Illinois. Illinois Governor JB Pritzker is expected to sign the bill into law.
The bill imposes limitations on noncompete and nonsolicitation agreements, and it aims to provide employers with more clarity about their enforceability. The bill has a January 1, 2022, effective date. The bill will:
-- require an employer to provide an employee at least 14 calendar days to review the agreement and “advise the employee in writing to consult with an attorney” before signing the agreement;
-- ban noncompete agreements for employees making $75,000 per year or less (the amount will increase by $5,000 every five years until reaching $90,000);
-- ban customer and coworker nonsolicitation agreements for employees making $45,000 per year or less (the amount would increase by $2,500 every five years until reaching $52,500);
-- authorize an employee to recover attorneys’ fees and costs if the employee prevails in a lawsuit brought by the employer seeking to enforce a noncompete or nonsolicitation agreement; and
-- prohibit employers from enforcing restrictive covenants with employees who are separated due to COVID-19 or “circumstances that are similar to the COVID-19 pandemic, unless enforcement of the covenant not to compete includes compensation equivalent to the employee’s base salary at the time of termination for the period of enforcement minus compensation earned through subsequent employment during the period of enforcement.”
If you have questions about a non-compete agreement, please contact us for a free, confidential case evaluation.
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126 East 56th Street, 8th Floor, Tower 56
New York, New York 10022
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