2022 Will Bring Strict Limits on Illinois Non-Compete and Non-Solicitation Agreements

On January 1, 2022, Illinois’ amendment to the Illinois Freedom to Work Act (IFWA) will take effect. The amended statute will render unenforceable non-compete agreements with employees earning less than $75,000 annually. Additionally, employers will be prohibited from entering into non-solicitation agreements with employees who earn less than $45,000 annually. The Act also imposes strict pre-employment notice requirements and helps to insulate employees from enforcement suits through mandatory fee-shifting if an employer is unsuccessful in litigation.

Income Calculations and Restrictions

The amended IFWA will apply prospectively to agreements entered on or after January 1,  2022. Thereafter, enforceability of non-competition and non-solicitation agreements will hinge on employees’ compensation level. In determining whether an employee will be subject to the new amendment based on earnings, employers must factor in not only salary, but also earned bonuses; commissions; wages; tips; and amounts electively deferred by the employee, including 401(k) contributions, 403(b) plans, flexible spending accounts, health savings accounts, and commuter benefit-related deductions.

The amended IFWA also provides that the income threshold for the restriction on non-compete provisions will increase by an amount of $5,000 every five years, topping out at $90,000 in 2037.

Similarly, the threshold for the restriction on non-solicitation agreements will increase by $2,500 every five years until 2037.

Finally, non-compete and non-solicitation agreements are unenforceable if the employee is terminated, furloughed, or laid off as a result of certain circumstances related to COVID-19 or a similar situation. However, If the employee is separated for one of these reasons, an otherwise enforceable agreement may still bind the employee if the employer compensates the employee in an amount equal to the employee's base salary at the time of termination for the period of enforcement of the restrictive covenant minus any compensation earned by the former employee via subsequent employment during the enforcement period.

Minimum Length of Employment and Notice Period

The amended  IFWA also requires at least two years or more of continued employment post-execution of a restrictive covenant in order for the covenant to be enforceable. The law does allow for “additional professional or financial benefits” in lieu of two years of post-execution employment, but does not define what types of benefits qualify.

Additionally, employers will be required to provide a copy of the non-competition and/or non-solicitation agreement to the employee 14 days prior to the start of employment. Employers must also advise the employee in writing to consult with an attorney in connection with the agreement prior to signing.

Additional Potential Consequences

In addition to the risk of unenforceability, employers will face enhanced risks when attempting to enforce limits against departed employees. Under the IFWA, employees who prevail on an employer’s claim to enforce will recover all costs and reasonable attorneys’ fees. Therefore, employers should take extra care to ensure their restrictive covenants and agreements meet the above conditions, or attempted enforcement will be not only futile, but also costly. Additional civil penalties are also provided for employers who engage in a “pattern or practice” of violating the Act.

Certain Types of Agreements Not Affected

In addition to non-competes and nonsolicitation agreements entered into before January 1, 2022, the IFWA also excludes some fairly common employee restrictions from its strict limitations. Non-disclosure and confidentiality provisions and agreements will remain unaffected. In addition, contract clauses requiring advanced notice of termination and agreements wherein the employee agrees not to reapply after termination are likewise left unscathed by the IFWA.


Starting January 1, 2022, employers should take careful steps to ensure any new employees who they wish to sign non-compete or non-restrictive agreements meet the income thresholds and are given appropriate notice.

If you have any questions about complying with the amended  IFWA, or other labor and employment laws, please contact one of our Labor & Employment attorneys.