Illinois Noncompete Agreement: What's Included and Enforceability

Quick Facts — Noncompete Agreement Lawyers (Illinois)

Is a Non-Compete Agreement Enforceable in Illinois?

Yes. In Illinois, non-compete agreements are generally enforceable. On January 1, 2022, Illinois enacted the Illinois Freedom to Work Act which modified the laws governing non-compete agreements. Under the new act, non-compete agreements are enforceable if the contract meets the following conditions:

  • The employee entering the agreement must earn at least $75,000 annually.
  • The employee must be employed for at least two years or have received professional or financial benefits.
  • The non-compete agreement must protect an employer’s legitimate business interest.
  • The contract must be deemed reasonable using the “Three-Component Test” created by the Illinois Supreme Court.
  • Employees must be given fourteen days to review the non-compete agreement before signing the contract.
  • Employers must advise employees in writing to consult an attorney before entering the agreement.

Proving that the non-compete agreement is reasonable is vital to ensuring that the contract is enforceable. The Illinois Supreme Court developed the “Three-Component Test" to determine the reasonability of a non-compete agreement. The three components are:

  1. Legitimate business The restrictions in the non-compete agreement protect a legitimate business interest like a trade secret or customer lists.
  2. Public hardship. The non-compete agreement cannot impose a hardship on the employee or the public.
  3. Reasonable restraint. The extent of the restrictions, like duration or geographic area, are reasonable.

Is the New Illinois Non-Compete Law Retroactive?

No. The amendments made to the Illinois Freedom to Work Act which went into effect on January 1, 2022 are not retroactive. Any non-compete agreements that were entered into prior to this date will not be effected by the amendment.

How Long Does an Illinois Non-Compete Agreement Last?

The new non-compete laws do not lay out a maximum term for the duration of the agreement. Based on previous court cases and non-compete agreements that Illinois courts have ruled reasonable, non-compete agreements can last up to five years.

Whether the duration of a non-compete agreement is deemed reasonable by the court depends heavily on the specific facts of the case. Factors that can effect whether a timeframe is reasonable include the type of work, the geographic area, the specialized training of the employee, and the business interest that is protected by the contract.

How Do You Get Around a Non-Compete Agreement in Illinois?

To get around a non-compete agreement in Illinois, the employee must show that the agreement does not adhere to the provisions in the amended Illinois Freedom to Work Act.

One way to do this, is to prove that the non-compete does not protect a legitimate business interest. Legitimate business interests are usually trade secrets, client lists, or other confidential business information that the employer takes precautions to keep confidential. The employer cannot use a non-compete to merely restrict competition in their industry.

What Voids an Illinois Non-Compete Agreement?

In Illinois, all contracts, including non-compete agreements, must adhere to state contract laws. In order for a contract to be legally binding and enforceable, it must contain an offer, acceptance, and consideration. Without any one of these elements, the contract will be void.

Consideration is the main component of a contract and it is the exchange of something of value between the parties. For non-compete agreements, many states consider ongoing employment adequate consideration for signing a non-compete. Illinois however requires more sufficient consideration.

Many Illinois courts will require that an employee is promised at least two years of tenure or additional financial consideration like a raise or a bonus to satisfy the condition of adequate consideration. Without this additional consideration, a court can deem an Illinois non-compete agreement void.

Frequently Asked Questions

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Noncompete Agreement

New Jersey

Asked on Apr 15, 2021

Can I work for a competitor with my current noncompete?

I have ended my non competent consulting agreement with my current employee and I have an offer to work as an employer “not as consultant” with a competitor company to my privious employees so can I work as an employee without any problem? The consultant agreement says the following: Under any circumstances the consultant shall not engage directly or indirectly either as a principal agent , consultant,stock holder , partner or in any other capacity whatsoever have any other relationship with any business which compete with the company in USA.

Jane C.

Answered Apr 16, 2021

I suggest that you have an attorney review the entire agreement. It is hard to comment reading a paragraph taken out of context. From the limited facts you present, it seems that you cannot accept this job offer without violating the terms of the non-compete. Disclaimer - This information is provided for general informational purposes only. No information contained in this post should be construed as legal advice and does not establish an attorney-client relationship.

Read 2 attorney answers>

Employee Rights

Noncompete Agreement

California

Asked on Sep 12, 2022

i work for a employer from illinois ,however i am in california. My contract has non compete clause. will that be enforceable

My employer has placed me in a position thru another vendor. My employer contract with that vendor is ending. So vendor contacted me. However I am in contract with my employer for 1 year contract.

Christopher M.

Answered Sep 13, 2022

Short answer: Probably no, non-compete and non-solicitation clauses are not usually enforceable on an employee in California. Long Answer: Regardless of the choice of law provision in your contract, if an enforcement action is brought against you in California, the California courts will dismiss it as it goes against the "public policy of the state" unless your employer can make a really compelling case. Most states respect the stated public policy of other states when deciding matters against their citizens, so even if the case was brought in another states courts your soon to be former employer would probably be powerless to get a judgement enforcing your non-compete.

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Employment

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Asked on Jun 29, 2023

Noncompete agreement breach consequences?

I recently left my job as an employee at a company that I had worked for for over a year. I was asked to sign a noncompete agreement when I began the job, which I did. I have since started a new job in the same industry as my former employer, which is in violation of the noncompete agreement. I am now wondering what the consequences of this breach of contract may be and am seeking legal advice.

Gregory F.

Answered Jul 6, 2023

I would be happy to schedule a paid telephone consultation with you to review the non-compete agreement, advise you on its scope and enforceability, and answer your questions. Please contact me via email at greg@fidlonlegal.com to discuss.

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Employee Rights

Noncompete Agreement

New York

Asked on Dec 5, 2024

Can my employer enforce a non-compete agreement I signed even though I was not provided any additional compensation or benefits in return?

I recently started a new job and was asked to sign a non-compete agreement as a condition of employment. However, I just found out from a colleague that my employer has been enforcing the non-compete agreement against former employees and preventing them from working in similar roles at competing companies. I am concerned because I was not given any additional compensation or benefits in exchange for signing the agreement, and I believe it may be unfair and potentially unenforceable. Can my employer legally enforce the non-compete agreement even though I did not receive any additional compensation or benefits in return?

Damien B.

Answered Dec 6, 2024

Hello! Generally, New York courts require that a non-compete agreement be supported by adequate consideration. If the agreement is signed at the beginning of employment, the job itself may serve as adequate consideration. However, if the non-compete is signed after employment begins, the employer may need to offer additional benefits, such as a raise or promotion, for the agreement to be enforceable. There are other defenses against enforcement. For a non-compete agreement to be enforceable, it must be reasonable in terms of duration, geographic scope, and the scope of activities it restricts. A court will evaluate whether the agreement is necessary to protect the employer’s legitimate business interests, such as confidential information or customer relationships. If not, a court could rule the noncompete is not enforceable.

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Employee Rights

Noncompete Agreement

Texas

Asked on Jun 3, 2023

Noncompete agreement and moonlighting?

I am an employee at a company that has recently asked me to sign a noncompete agreement. I am considering doing so, but I am concerned about whether or not the agreement would prevent me from taking on additional freelance work outside of my normal job. I am interested in moonlighting and need to know if a noncompete agreement would limit my ability to do so.

Curt L.

Answered Jun 6, 2023

If you moonlighting work is in the same business and same market, it is almost certainly prohibited by a noncompete agreement.

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