On August 19, 2016, Illinois Governor Bruce Rauner signed into law the Illinois Freedom to Work Act. The new law, which is effective January 1, 2017, prohibits employers from entering into covenants not to compete with low-wage employees and provides that any agreement entered into in violation of the Act is illegal and void.
Under the Act, a “low-wage employee” is any employee who earns the greater of: (1) the hourly rate equal to the minimum wage required by the applicable Federal, State, or local minimum wage law; or (2) $13.00 per hour.
Covenants not to compete prohibited by the Act include agreements that restrict a low-wage employee from performing:
- work for another employer for a specified period of time;
- work in a specified geographical area; or
- work for another employer that is similar to such low-wage employee’s work for the employer with which the employee entered into the agreement.
The Act appears to apply only to covenants not to compete and does not expressly apply to non-solicitation agreements prohibiting low-wage employees from soliciting the employer’s customers or employees. The Act also does not prohibit non-disclosure or confidentiality agreements to protect an employer’s confidential information.
If you have any questions regarding the Illinois Freedom to Work Act or would like to discuss the preparation of employment agreements for your business, please contact:
firstname.lastname@example.org or 312-368-0100.