Illinois Non-Compete Agreement

Introduction

Key Things to Know

1. 1

   A non-compete agreement is a contract in which one party, usually an employee, agrees not to compete with a business for a set time and area after the relationship ends. In Illinois it is enforceable only within the strict limits of the Freedom to Work Act (820 ILCS 90).

2. 2

   Illinois allows employee non-competes but voids them below a salary floor. Under 820 ILCS 90/10 a covenant not to compete is void and illegal unless the employee's annualized earnings exceed $75,000 per year, and a covenant not to solicit is void unless earnings exceed $45,000.

3. 3

   The thresholds rise on a schedule. The non-compete floor increases to $80,000 on January 1, 2027, $85,000 on January 1, 2032, and $90,000 on January 1, 2037; the non-solicitation floor rises to $47,500, then $50,000, then $52,500. Confirm the current figure and do not use another state's number.

4. 4

   Even above the floor, a covenant is enforceable only if it is ancillary to a legitimate business interest, no greater than necessary to protect that interest, does not impose undue hardship on the employee, and is not injurious to the public (820 ILCS 90/15). Courts in Illinois weigh time, geography, and scope against that interest.

5. 5

   The covenant needs adequate consideration and advance notice. Under 820 ILCS 90/5 adequate consideration means at least 2 years of continued employment after signing or other adequate professional or financial benefits, and under Section 90/20 the employer must advise the employee in writing to consult an attorney and give at least 14 calendar days to review it.

6. 6

   Some workers cannot be bound at all. A covenant is void and illegal for construction workers (with narrow management and sales carve-outs) and for employees covered by a collective bargaining agreement, and it is void for a worker terminated in COVID-19-like circumstances unless the employer pays base salary during the enforcement period (820 ILCS 90/10).

7. 7

   Confidentiality and trade-secret agreements are excluded from the Act and are not subject to the salary floor, so Illinois employers often protect confidential information with a nondisclosure agreement and the Illinois Trade Secrets Act (765 ILCS 1065) instead of, or alongside, a non-compete.

Illinois Requirements for Non-Compete Agreement

• Enforceable With Strict Limits

  In Illinois an employee non-compete is enforceable, but only within the Illinois Freedom to Work Act (820 ILCS 90), effective January 1, 2022. The covenant must clear a salary floor, rest on adequate consideration, protect a legitimate business interest, be reasonable, and be properly noticed. A covenant that misses any of these requirements is void and cannot be enforced in Illinois.

• Earnings Floor of $75,000

  A covenant not to compete is void unless the employee's actual or expected annualized earnings exceed $75,000 per year (820 ILCS 90/10). The floor rises to $80,000 on January 1, 2027, $85,000 on January 1, 2032, and $90,000 on January 1, 2037. Confirm the current figure and do not rely on any other state's salary number.

• Lower Floor for Non-Solicitation

  A narrower covenant not to solicit the employer's customers or coworkers is void unless the employee's annualized earnings exceed $45,000 per year (820 ILCS 90/10), rising to $47,500, then $50,000, then $52,500 on the same 2027, 2032, and 2037 dates. This lower-threshold option lets an employer protect customer and coworker relationships when a full non-compete would be void on earnings.

• Legitimate Interest and Reasonable Scope

  Even above the salary floor, a covenant is enforceable only if it is ancillary to a legitimate business interest, no greater than necessary to protect it, does not impose undue hardship on the employee, and is not injurious to the public (820 ILCS 90/15). Illinois sets no fixed maximum duration or distance; courts in Illinois weigh the time, geography, and restricted activities together, so keep the restriction narrow.

• Adequate Consideration Required

  The covenant must be supported by adequate consideration under 820 ILCS 90/5, which means the employee worked at least 2 years after signing or the employer otherwise provided consideration adequate to support the agreement, such as a shorter employment period combined with additional professional or financial benefits. Continued at-will employment alone is often not enough in Illinois.

• 14-Day Notice and Attorney Advice

  Under 820 ILCS 90/20 the employer must advise the employee in writing to consult an attorney before entering into the covenant and must provide a copy at least 14 calendar days before employment begins or give at least 14 calendar days to review it. The employee may sign before the 14 days end, but the employer must have offered the full review period. A covenant without this notice is not properly formed.

• Void for Construction and Union Workers

  A covenant not to compete is void and illegal for individuals covered by a collective bargaining agreement under the Illinois Public Labor Relations Act or the Illinois Educational Labor Relations Act, and for individuals employed in construction (except certain management, engineering, design, sales, or ownership roles) - 820 ILCS 90/10. It is also void for a worker terminated in COVID-19-like circumstances unless the employer pays base salary during the enforcement period, minus later earnings.

• Limited Reformation; Use an NDA Instead

  Illinois courts may reform or sever an overbroad covenant but need not, and extensive rewriting may be against public policy (820 ILCS 90/35), while a prevailing employee recovers attorney fees (820 ILCS 90/25). Because confidentiality and trade-secret agreements sit outside the Act, Illinois employers often protect information with a nondisclosure agreement and the Illinois Trade Secrets Act (765 ILCS 1065) rather than rely on a broad non-compete.