Illinois Chips Away at Use of Non-Compete Agreements for Low-Wage Earners


By: Timothy Holdsworth

The political storm that has been brewing around the appropriate minimum wage amount now seems to have spread into the non-compete world.  Last month, Illinois enacted the Freedom to Work Act, which prohibits employers from entering into non-compete agreements with workers that earn $13 per hour or less.  Effective January 1, 2017, this law prohibits so called “low wage workers” from entering into agreements that restrict:

  1. Working for another employer for a specified period of time;
  2. Working in a specified geographic area; or
  3. Performing “similar” work for another employer.

Any non-compete agreements containing any of these provisions entered into after January 1, 2017 will be considered “illegal and void.”  The silver lining is that this law does not prohibit employers from entering into non-solicitation, non-disclosure, or confidentiality agreements with these employees.  Nonetheless, employers operating in Illinois should review and update their new-hire paperwork for employees earning $13 per hour or less to ensure they are not relying on non-compete agreements that they will not be able to enforce.

Feel free to contact counsel at Freeman Mathis & Gary if you have any questions or would like guidance on these issues.