On January 1, 2022, amendments to the Illinois Freedom to Work Act, 820 ILCS 90/1, et seq. (the “Act”), became effective, trumpeting reforms and limitations on an employer’s ability to enter into covenants not to compete and covenants not to solicit with certain categories of employees whose actual or expected annualized rate of earnings fall below certain thresholds.
Now, just two short years later, the Illinois state legislature has introduced four different bills containing proposed amendments to the Act that would undermine, if not completely obliterate, the Act’s 2022 amendments.
The first bill, SB 2737, introduced on January 12, 2024, would render any covenant not to compete or covenant not to solicit entered into after January 1, 2022, unenforceable with respect to professionals licensed in Illinois who provide mental health services to veterans and first responders.
The second bill, HB 4888, which was introduced on February 7, 2024, seeks to amend the Act by providing that “a covenant not to compete or a covenant not to solicit is not enforceable if it restricts an employee’s ability to exercise his or her rights under federal law.”
The third bill, HB 5385, introduced on February 9, 2024, would prohibit all covenants not to compete and covenants not to solicit. Additionally, the legislation would prohibit employers from enforcing “a contract that is void and unenforceable under the Act regardless of whether the contract was signed and the employment was maintained outside of” Illinois. The bill also contains a notice requirement, requiring that on or by April 1, 2025, employers notify employees, as well as former employees who were employed after January 1, 2023, in writing that the covenant not to compete or the covenant not to solicit is void and unenforceable.
The fourth bill, SB 2770, as amended, introduced on February 20, 2024, would declare covenants not to compete void and illegal for individuals employed in construction, regardless of whether the individuals are covered by a collective bargaining agreement. The bill, however, allows for employers to enter into covenants not to compete with “construction employees who primarily perform management, engineering or architectural, design, or sales functions for the employer or who are shareholders, partners, or owners in any capacity of the employer.”
While it remains unseen which, if any, of these bills may become law, their introduction reflects the continuing national discussion about noncompetes and non-solicitation agreements. We will continue to monitor and provide updates on these developments.
