Skip to main content

Nixon Peabody LLP

  • People
  • Capabilities
  • Insights
  • About
Trending Topics
    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni
    Practices

    View All

    • Affordable Housing
    • Community Development Finance
    • Corporate & Finance
    • Cybersecurity & Privacy
    • Entertainment & Media
    • Environmental
    • Franchising & Distribution
    • Government Investigations & White Collar Defense
    • Healthcare
    • Intellectual Property
    • International Services
    • Labor, Employment, and Benefits
    • Litigation
    • Private Wealth & Advisory
    • Project Finance
    • Public Finance
    • Real Estate
    • Regulatory & Government Relations
    Industries

    View All

    • Aviation
    • Cannabis
    • Consumer
    • Energy
    • Financial Services
    • Healthcare
    • Higher Education
    • Infrastructure
    • Manufacturing
    • Nonprofit Organizations
    • Real Estate
    • Sports & Stadiums
    • Technology
    Value-Added Services

    View All

    • Alternative Fee Arrangements

      Developing innovative pricing structures and alternative fee agreement models that deliver additional value for our clients.

    • Continuing Education

      Advancing professional knowledge and offering credits for attorneys, staff and other professionals.

    • Crisis Advisory

      Helping clients respond correctly when a crisis occurs.

    • DEI Strategic Services

      Providing our clients with legal, strategic, and practical advice to make transformational changes in their organizations.

    • eDiscovery

      Leveraging law and technology to deliver sound solutions.

    • Environmental, Social, and Governance (ESG)

      We help clients create positive return on investments in people, products, and the planet.

    • Global Services

      Delivering seamless service through partnerships across the globe.

    • Innovation

      Leveraging leading-edge technology to guide change and create seamless, collaborative experiences for clients and attorneys.

    • IPED

      Industry-leading conferences focused on affordable housing, tax credits, and more.

    • Legal Project Management

      Providing actionable information to support strategic decision-making.

    • Legally Green

      Teaming with clients to advance sustainable projects, mitigate the effects of climate change, and protect our planet.

    • Nixon Peabody Trust Company

      Offering a range of investment management and fiduciary services.

    • NP Capital Connector

      Bringing together companies and investors for tomorrow’s new deals.

    • NP Second Opinion

      Offering fresh insights on cases that are delayed, over budget, or off-target from the desired resolution.

    • NP Trial

      Courtroom-ready lawyers who can resolve disputes early on clients’ terms or prevail at trial before a judge or jury.

    • Social Impact

      Creating positive impact in our communities through increasing equity, access, and opportunity.

    • Women in Dealmaking

      We provide strategic counsel on complex corporate transactions and unite dynamic women in the dealmaking arena.

    1. Home
    2. Insights
    3. Alerts
    4. Illinois Legislature passes non-compete reform

      Alerts

    Alert / Trade Secrets

    Illinois Legislature passes non-compete reform

    June 4, 2021

    LinkedInX (Twitter)EmailCopy URL

    Businesses and employees in Illinois must prepare for changes affecting the enforceability of employee non-compete agreements following new legislation that will likely take effect in 2022.

    DOWNLOAD

    Illinois non-compete reform (PDF)

    Illinois employers and employees alike need to be cognizant of changes that will impact the enforceability of employee non-compete agreements entered into after 2021.

    Legislation unanimously passed by the Illinois General Assembly over Memorial Day weekend, and anticipated to be signed into law by Governor Pritzker, will take effect for employee covenants not to compete or covenants not to solicit customers or employees entered into as of January 1, 2022. Existing non-compete agreements will not be impacted.

    Among the key aspects of the new legislation are the following:

    • Bans covenants not to compete for employees making less than $75,000 per year in earnings (including any commissions or bonuses). That threshold will increase over time (by $5,000 every five years) until the threshold becomes $90,000 in January 2037.
    • Bans customer non-solicitation agreements and employee non-solicitation agreements for employees making less than $45,000 per year in earnings. This threshold will increase in $2,500 increments every five years until it becomes $52,500 in January 2037.
    • Mandates the recovery of attorneys’ fees and costs by an employee who prevails in a lawsuit brought by the employer seeking to enforce a covenant not to compete or covenant not to solicit.
    • Makes covenants not to compete or not to solicit void and illegal unless the employer both (a) provides employees 14 days to review an agreement containing a covenant not to compete or not to solicit and (b) advises the employee in writing to discuss the agreement with an attorney.
    • Clarifies that the determination of whether an employer has a legitimate business interest that may justify use of a covenant not to compete or covenant not to solicit is judged by the “totality of the facts and circumstances.”
    • Codifies the “two-year rule” followed by certain Illinois state courts, which requires either (a) two years of employment or (b) alternative “adequate” consideration to make a non-compete or non-solicitation agreement enforceable.
    • Permits courts, in some circumstances and in the court’s discretion, to reform or sever provisions of a non-compete or non-solicitation agreement rather than hold them unenforceable, while noting that “extensive” reformations may be against Illinois public policy.
    • Bans enforcement of covenants not to compete for employees who are terminated or furloughed as a result of COVID-19 or “circumstances that are similar to the COVID-19 pandemic” unless certain compensation is provided.
    • Bans non-compete agreements for certain, specified union employees who are bound by collective bargaining agreements.
    • Permits the Illinois Attorney General to investigate potential violations of the law.

    The legislation clarifies that the following are not considered to be “covenants not to compete”:

    • a confidentiality clause;
    • a clause protecting a company’s trade secrets or inventions;
    • a non-compete agreement entered into in connection with the acquisition or sale of an ownership interest in a business; and
    • a clause requiring advance notice of termination during which the employee remains employed and receives compensation.

    While existing non-compete agreements will not be impacted by this legislation, employers should nevertheless review their existing non-compete and non-solicit agreements to ensure they provide adequate protection. To prepare for the effective date of the legislation, employers should create new “template” agreements that comply with the law for eligible future employees.

    Practices

    Labor, Employment & BenefitsLabor & Employment LitigationNon-Compete & Trade SecretsWorkplace Policies, Procedures & Training

    Insights And Happenings

    • Alert

      New York could become latest state to ban noncompete agreements

      June 26, 2023
    • Press Release

      Nixon Peabody relocates into its new Chicago office, designed for the future of legal services

      Sep 27, 2021
    • Alert

      COVID-19: How employers can continue to protect confidential information and trade secrets with a remote workforce

      May 7, 2020
    The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

    Subscribe to stay informed of the latest legal news, alerts, and business trends.Subscribe

    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni
    • Cookie Preferences
    • Privacy Policy
    • Terms of Use
    • Accessibility Statement
    • Statement of Client Rights
    • Purchase Order Terms & Conditions
    • Nixon Peabody International LLC
    • PAL
    © 2025 Nixon Peabody. All rights reserved