October 24, 2021

Volume XI, Number 297

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October 22, 2021

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October 21, 2021

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Illinois Employers’ Ability to Have Non-Competes with Low-Wage Workers Ends

The Illinois Freedom to Work Act, effective January 1, 2017, bars employers from entering into covenants not to compete with any employee that earns the greater of $13.00 per hour or the applicable hourly federal, state, or local minimum wage or less.

The Act covers agreements between employers and low-wage employees that restrict low-wage employees from performing:

  1. Work for another employer for a specified period of time;

  2. Any work in a specified geographical area; or

  3. Work for another employer that is similar to such low-wage employee’s work for the employer.

Notably, the Act does not prohibit employers from including non-solicitation and non-disclosure provisions in low-wage worker contracts. The Act applies only to agreements entered into after the January 1, 2017 effective date. The Act applies to private employers and does not cover governmental or quasi-governmental employers.

The Act is part of the latest movement against restrictive covenants in employment. Earlier this year, Connecticut, Rhode Island, and New Mexico passed new restrictions on the use of non-competes in the health care industry, and just last month, the White House urged states to reform their laws on restrictive covenants to include banning non-competes for low-wage workers. Additionally, in June 2016, the Illinois Attorney General’s Office filed a lawsuit against the popular sandwich chain, Jimmy John’s, for its use of non-competes with low-wage employees. Jimmy John’s asserted that the non-competes were no longer in use, provided to new employees, or enforced.

Private employers in Illinois should evaluate their new hire paperwork for low-wage employees to ensure it does not include non-compete provisions, and if it does, that these provisions are removed. Employers who need to protect their trade secrets and confidential information should be sure they still include those provisions. The Act is also a good reminder to all employers that any restrictive covenant must be supported by adequate consideration (determined state-by-state), tailored to protect legitimate business interests, and to the extent possible, position specific. Whether a restrictive covenant ultimately will be enforced remains a fact and state specific inquiry.

©2021 MICHAEL BEST & FRIEDRICH LLPNational Law Review, Volume VI, Number 327
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About this Author

Eric Rumbaugh, Michael Best Law Firm, Labor and Employment Attorney
Partner

Eric advises clients in all areas of labor and employment law. With a practice that is national in scope, he is particularly active in litigating matters involving trade secrets, non-competition agreements and related disputes.

Eric has a nationally recognized practice in the area of contingent labor and regularly prepares and reviews policies, procedures and contracts and litigates contested matters for users and providers of temporary employees, consultants, independent contractors and other contingent talent.  Eric also counsels public...

414-225-2742
Luis Arroyo, Labor attorney, employment relations lawyer, Michael Best, Milwaukee Law firm
Partner

Luis represents employers in a range of labor and employment matters and has developed a significant practice focusing on employee defection and recruitment, including litigating injunction and damage actions relating to: covenants not to compete, non-solicitation and non-disclosure agreements, unfair competition, trade secrets, duty of loyalty, the Computer Fraud & Abuse Act, and state trade secrets and unfair competition statutes. 

Luis has represented clients in numerous industries including banking and securities brokerage, print media, software, medicine, automotive parts...

414-225-2773
Elizabeth N. Larson, Michael Best, Employment Discrimination Lawyer, Affirmative Action Compliance Attorney
Associate

Elizabeth focuses on employment discrimination, affirmative action, and Office of Federal Contract Compliance Programs (OFCCP) matters. Clients value her responsiveness, as well as her attention to detail, in these areas. They also look to her for support with trade secret and non-compete litigation.

Elizabeth previously served as a law clerk for MillerCoors where she researched a variety of legal matters including wage garnishments, disability discrimination, immigration law, alcohol and beverage law, privacy, and intellectual property. She...

414-225-8295
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