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The Illinois General Assembly recently approved House of Representatives Amendment 1 to Senate Bill (SB) 672, which would significantly reform noncompete and nonsolicitation law in Illinois. The bill will now go to Governor JB Pritzker, who is expected to sign the bill into law.
The bill would impose limitations on noncompete and nonsolicitation agreements, and it aims to provide employers with more clarity about their enforceability. The bill has a January 1, 2022, effective date.
Highlights of SB 672 House Amendment 1:
Noncompete and Nonsolicitation Limitations
SB 672 would:
require an employer to provide an employee at least 14 calendar days to review the agreement and “advise[] the employee in writing to consult with an attorney” before signing the agreement;
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Following a nationwide trend, Illinois has proposed significant legislation affecting employee restrictive covenants, such as non-compete agreements. While the proposed law does not dramatically change most aspects of the patchwork of Illinois common law, it adds certainty to long-questioned areas and imposes several threshold hurdles and eligibility factors to the test for assessing enforceable restrictive covenants.
On May 31, 2021, the Illinois Senate and House of Representatives passed Senate Bill 672, which amends the Illinois Freedom to Work Act, 820 ILCS 90/(“IFWA”). Expected to be signed into law by Governor Pritzker, the Bill would change the IFWA with respect to the standards required to enter into and enforce employee non-compete agreements. Currently, under the IFWA, employers are prohibited from entering into non-compete agreements with “low-wage” employees, defined as those earning $13.00 per hour
Illinois General Assembly approved House of Representatives Amendment 1 to Senate Bill SB 672, which would significantly reform noncompete and nonsolicitation law in Illinois, multiple emplyer and employee review requirements prior to accepting any agreements.
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In 2016, Illinois enacted the Illinois Freedom to Work Act (IFWA). In doing so, it became one of the first states to pass legislation in response to the Obama administration’s Call to Action, which asked states to amend their restrictive covenant laws to, among other things, ban covenants not to compete for workers under a certain wage threshold. Other states that similarly enacted or amended their restrictive covenant laws to include low-wage restrictions, include Maine, Maryland, Massachusetts, New Hampshire, Rhode Island, Virginia, and Washington. In January 2021, the District of Columbia took the trend a step further by enacting the Ban on Non-Compete Agreements Amendment Act of 2020, which bans virtually all noncompetes for employees in the District.
Tuesday, February 16, 2021
In 2016, Illinois enacted the Illinois Freedom to Work Act (IFWA). In doing so, it became one of the first states to pass legislation in response to the Obama administration’s Call to Action, which asked states to amend their restrictive covenant laws to, among other things, ban covenants not to compete for workers under a certain wage threshold. Other states that similarly enacted or amended their restrictive covenant laws to include low-wage restrictions, include Maine, Maryland, Massachusetts, New Hampshire, Rhode Island, Virginia, and Washington. In January 2021, the District of Columbia took the trend a step further by enacting the Ban on Non-Compete Agreements Amendment Act of 2020, which bans virtually all noncompetes for employees in the District.