Businesses have an interest in mitigating the risk inherent in hiring new workers. They want to ensure that professionals can’t leave the organization and compete unfairly against it. Employers frequently add restrictive covenants to their contracts to protect against worker misconduct.
Noncompete agreements are well-known restrictive covenants. They prevent employees from starting a competing business or accepting a position with a direct competitor. Non-solicitation agreements are similar but less well-known. They limit an employee’s ability to do business with clients or customers they met through their jobs or to hire their former co-workers or subordinates after leaving their position at the company.
Lawmakers have addressed concerns about abuses of these limiting contract inclusions by imposing strict regulations on their use at the state level in Illinois. Many business leaders now feel uncertain about the restrictive covenants included in employment contracts. Can businesses continue to enforce noncompete and non-solicitation agreements in Illinois?
There are salary requirements
The Illinois Freedom to Work Act protects workers from unfair limitations on their economic opportunities. It restricts the blanket use of restrictive covenants, especially for workers who receive relatively low salaries. The law establishes clear salary thresholds for both noncompete agreements and non-solicitation agreements.
The law mandates a minimum salary of $75,000 for a worker to be subject to a noncompete agreement, and the law also establishes a $5,000 increase to that baseline salary every five years. The salary threshold for non-solicitation agreements is slightly lower, at $45,000 initially. It is also subject to rules allowing for the minimum salary to increase every five years by $2,500 until 2037.
There are notification requirements
Employees considering jobs that may limit their future professional opportunities have a right to know about that risk. Employers must notify workers in writing at least 14 days before they begin their new position about the restrictive covenants included in the contract. The failure to do so may limit the enforceability of the agreement.
Similarly, those paid a salary that does not meet the baseline requirements could potentially avoid the enforcement of a restrictive covenant if their former employers try to take them to court. If the agreement is overly broad or restricts worker options for an unreasonable amount of time, it may be unenforceable in civil court.
Learning more about Illinois’s unique approach to these powerful employment contract inclusions can help businesses protect their interests without violating the law. Legal guidance is critical when reviewing an employment contract and the restrictive covenants it contains to determine if enforcement is possible.
