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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Curt Brown has experience advising clients on a variety of franchising, business litigation, transactional, and securities law matters. Mr. Brown's accolades include: - Super Lawyers Rising Star - California Lawyer of the Year by The Daily Journal - Pro Bono Attorney of the Year the USC Public Interest Law Fund Curt started his legal career in the Los Angeles office of the prestigious firm of Irell & Manella LLP, where his practice focused on a wide variety of complex civil litigation matters, including securities litigation, antitrust, trademark, bankruptcy, and class action defense. Mr. Brown also has experience advising mergers and acquisitions and international companies concerning cyber liability and class action defense. He is admitted in California, Florida, D.C., Washington, Illinois, Colorado, and Michigan.

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My name is Ryenne Shaw and I help business owners build businesses that operate as assets instead of liabilities, increase in value over time and build wealth. My areas of expertise include corporate formation and business structure, contract law, employment/labor law, business risk and compliance and intellectual property. I also serve as outside general counsel to several businesses across various industries nationally. I spent most of my early legal career assisting C.E.O.s, General Counsel, and in-house legal counsel of both large and smaller corporations in minimizing liability, protecting business assets and maximizing profits. While working with many of these entities, I realized that smaller entities are often underserved. I saw that smaller business owners weren’t receiving the same level of legal support larger corporations relied upon to grow and sustain. I knew this was a major contributor to the ceiling that most small businesses hit before they’ve even scratched the surface of their potential. And I knew at that moment that all of this lack of knowledge and support was creating a huge wealth gap. After over ten years of legal experience, I started my law firm to provide the legal support small to mid-sized business owners and entrepreneurs need to grow and protect their brands, businesses, and assets. I have a passion for helping small to mid-sized businesses and startups grow into wealth-building assets by leveraging the same legal strategies large corporations have used for years to create real wealth. I enjoy connecting with my clients, learning about their visions and identifying ways to protect and maximize the reach, value and impact of their businesses. I am a strong legal writer with extensive litigation experience, including both federal and state (and administratively), which brings another element to every contract I prepare and the overall counsel and value I provide. Some of my recent projects include: - Negotiating & Drafting Commercial Lease Agreements - Drafting Trademark Licensing Agreements - Drafting Ambassador and Influencer Agreements - Drafting Collaboration Agreements - Drafting Service Agreements for service-providers, coaches and consultants - Drafting Master Service Agreements and SOWs - Drafting Terms of Service and Privacy Policies - Preparing policies and procedures for businesses in highly regulated industries - Drafting Employee Handbooks, Standard Operations and Procedures (SOPs) manuals, employment agreements - Creating Employer-employee infrastructure to ensure business compliance with employment and labor laws - Drafting Independent Contractor Agreements and Non-Disclosure/Non-Competition/Non-Solicitation Agreements - Conducting Federal Trademark Searches and filing trademark applications - Preparing Trademark Opinion Letters after conducting appropriate legal research - Drafting Letters of Opinion for Small Business Loans - Drafting and Responding to Cease and Desist Letters I service clients throughout the United States across a broad range of industries.

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Business Contracts

Noncompete Agreement

Florida

Asked on May 21, 2023

Noncompete agreement for consultants?

I am a consultant who is looking to take on a new client, but the client requires me to sign a Noncompete Agreement. I want to make sure that I am not signing away my rights, and that the agreement is fair and reasonable. I am also interested in understanding how this agreement would affect my ability to work with other clients.

Venus C.

Answered May 30, 2023

Hello. I appreciate your concerns about signing a Noncompete Agreement. It's essential to protect your rights and ensure the agreement is fair and reasonable given that a noncompete typically restricts competing activities during or after the term of engagement. Without knowing more about the business relationship and reviewing the actual terms, whether the non-compete is fair, reasonable, or even enforceable remains an open-ended question. Bearing this in mind, if the noncompete is preventing you from taking on other clients during or after the end of your relationship (or both), the scope of this restriction must be reasonable in terms of time, geographic area, and the specific activities it seeks to prevent. For example, does the noncompete specify the types of clients, industries, or geographic areas that are off-limits? What is the duration of the noncompete? If the client breaches your main agreement, will that render your noncompete void and unenforceable? These are just a few general questions that require a thorough review and analysis against Florida non-compete laws. Overall, the ultimate goal is to carefully review the terms to understand how they might impact your ability to take on new clients. If you don’t understand or are unsure about the contractual terms and their legal implications, it's highly recommended you consult with an attorney who can review the noncompete and provide you with personalized legal advice before you sign.

Read 1 attorney answer>

Employer

Noncompete Agreement

Connecticut

Asked on Jul 13, 2023

Can a noncompete agreement be waived?

I am a small business owner in the retail industry and I am looking to hire a new employee. The employee has a noncompete agreement with their previous employer that I am concerned about. I want to know if it's possible for the agreement to be waived so that I can be sure I'm making the right decision in hiring this employee.

Thomas L.

Answered Jul 21, 2023

Yes, the parties to contracts can always agree to amendments and waivers. However, the former employer may have no interest in waiving the contract in this particular situation.

Read 1 attorney answer>

Employer

Noncompete Agreement

Florida

Asked on Jul 6, 2023

How to draft a noncompete agreement?

I am a business owner who is looking to hire a new employee and I want to ensure that my business does not suffer from any competition that the employee might bring in the future. I need to know how to draft a noncompete agreement so that I can protect my business from any potential risks.

Daniel D.

Answered Jul 21, 2023

Some things that would be relevant to know are: what industry are you in? What specific competition are you worried about? Are you going to include non-disclosure provisions, no-solicitation provisions or non-circumvention provisions? What risks are you specifically worried about?

Read 1 attorney answer>

Employment

Noncompete Agreement

Colorado

Asked on Mar 31, 2021

Can I get out of my noncompete agreement?

I am looking at my options.

Donya G.

Answered Mar 31, 2021

You may be able to be released from a non compete. You would have to review the language in the non compete to see the expiration. DISCLAIMER The answers to these questions do not constitute legal advice and does not create an attorney-client relationship with the attorney and anyone who reviews these responses.

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Employment

Noncompete Agreement

Delaware

Asked on Dec 12, 2023

Employee contract, such as non compete/non solicit, could having this contract ever result in criminal/jail time?

If someone accuses you of fraud, because they believe you never had intended to honor your employment contract such as non-compete/non-solicit. Could this ever become a criminal case, resulting in criminal/jail time?

Matthew S.

Answered Dec 16, 2023

No, at worst, it is a breach of a contract which is a civil matter to be handled in civil court.

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