Governor Pritzker Signs Illinois Noncompete Legislation Into Law

On August 13, 2021, Illinois Governor JB Pritzker signed into law Senate Bill (SB) 672, an amendment to the Illinois Freedom to Work Act. While the law codifies substantive Illinois common law on restrictive covenants, it also sets forth new and important limitations and requirements regarding the use of noncompete and nonsolicitation agreements. For example, the law imposes salary thresholds limiting which employees can sign noncompete and nonsolicitation agreements, establishes a 14-day notice period for employees to review such agreements, allows a recovery of attorneys’ fees and costs if an employee prevails in an enforcement lawsuit brought by an employer, and protects employees who are separated from employment due to COVID-19 (or similar circumstances). The law will take effect on January 1, 2022, and it will not apply retroactively.

Although the new law does not affect existing, signed noncompete and nonsolicitation agreements, employers may want to review their restrictive covenant implementation toolkit to ensure that after January 1, 2022, they enter into restrictive covenants with permitted employees. Employers may also want to determine whether to make substantive changes to their template agreements (evaluating, for example, whether to incorporate the statutory notice period into the agreements or to address the issue separately in side letters at the time of tendering such agreements).

Ogletree Deakins will continue to monitor changes in Illinois restrictive covenant law and will post updates on the firm’s Illinois and Unfair Competition and Trade Secrets blogs as additional information and guidance become available. Important information for employers is also available via the firm’s webinar and podcast programs.