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Illinois Non-Disclosure Agreement Requirements

An Illinois NDA sits alongside a longer trade secret window than most states use: a misappropriation claim under the Illinois Trade Secrets Act (765 ILCS 1065/1 et seq.) generally must be filed within five years of when the misappropriation was discovered or reasonably should have been, a longer window than the three years used in many other states.

Introduction

An Illinois NDA sits alongside a longer trade secret window than most states use: a misappropriation claim under the Illinois Trade Secrets Act (765 ILCS 1065/1 et seq.) generally must be filed within five years of when the misappropriation was discovered or reasonably should have been, a longer window than the three years used in many other states. It also has to be drafted with one statute in mind that most states do not have: the Illinois Freedom to Work Act (820 ILCS 90/1 et seq.). It voids a covenant not to compete unless the employee's annualized earnings exceed $75,000 a year, and voids a covenant not to solicit unless earnings exceed $45,000 a year, with both thresholds rising in steps through 2037. It also requires the employer to advise the employee in writing to consult an attorney and to give at least 14 calendar days to review the covenant before signing. None of this bans NDAs, but a confidentiality clause written broadly enough to function as a non-compete or non-solicit can be pulled into the same analysis. An Illinois NDA is otherwise an ordinary, enforceable confidentiality contract, mutual or one-way, used to protect trade secrets and other sensitive information exchanged between parties.

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Key Things to Know

  1. 1

    If an Illinois NDA is used in an employment relationship and asks someone to assign inventions to the employer, the Illinois Employee Patent Act (765 ILCS 1060/2) excludes an invention the employee developed entirely on their own time, without using the employer's equipment, supplies, facilities, or trade secret information, unless the invention relates to the employer's business or anticipated research, or resulted from work the employee performed for the employer.

  2. 2

    The Illinois Freedom to Work Act (820 ILCS 90/10) voids a covenant not to compete unless the employee's actual or expected annualized earnings exceed $75,000 per year, and voids a covenant not to solicit unless earnings exceed $45,000 per year. Both thresholds rise on a set schedule through January 1, 2037, and an NDA's confidentiality definition can implicate the Act if it functions as either kind of restriction.

  3. 3

    Beyond the earnings thresholds, the Act also requires adequate consideration, that the covenant be ancillary to a valid employment relationship, no broader than needed to protect a legitimate business interest, no undue hardship on the employee, and not injurious to the public (820 ILCS 90/15), plus a written recommendation to consult an attorney and at least 14 calendar days to review before signing (820 ILCS 90/20).

  4. 4

    Trade secret protection in Illinois runs through the Illinois Trade Secrets Act (765 ILCS 1065/1 et seq.), separate from whatever the NDA itself says, and covers formulas, patterns, compilations, programs, financial data, and customer or supplier lists that are kept reasonably secret and derive value from that secrecy.

  5. 5

    A trade secret misappropriation claim in Illinois generally must be filed within five years of when the misappropriation was discovered or reasonably should have been discovered (765 ILCS 1065/7), a longer window than the three years used in California and many other states.

  6. 6

    Mutual NDAs, where both sides share confidential information, and one-way NDAs, where only one side does, are both ordinary enforceable contracts in Illinois; which one fits depends on whether the exchange runs both directions, like a partnership or acquisition discussion, or one direction, like pitching an investor.

  7. 7

    An Illinois court can order injunctive relief to stop an ongoing or threatened breach of a valid NDA, in addition to any damages the disclosure caused.

Key decisions before you file

Before you file a Non-Disclosure Agreement in Illinois, a few decisions shape the document: which option to choose and what each one means. The Non-Disclosure Agreement guide walks through them.

Open the Non-Disclosure Agreement guide

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ILLINOIS NON-DISCLOSURE AGREEMENT

This Non-Disclosure Agreement is made between [Party A Name], of [City], Illinois, and [Party B Name], of [City], Illinois (individually a "Party" and together the "Parties").

  1. Parties and Purpose. The Parties expect to exchange sensitive information while [describe business purpose, e.g. evaluating a potential business relationship], and this Agreement sets the ground rules for that exchange.

  2. Definition of Confidential Information. Information a Party discloses qualifies as "Confidential Information" when labeled confidential or when the circumstances of disclosure would lead a reasonable person to treat it that way, including trade secrets as 765 ILCS 1065/2(d) of the Illinois Trade Secrets Act defines them: data, formulas, patterns, compilations, programs, or customer and supplier lists carrying economic value from staying unknown and kept secret through reasonable effort. Excluded are material the receiving Party independently developed or already possessed, material a third party lawfully passed along free of any confidentiality duty, and material that became public through no fault of the receiving Party.

  3. Obligations of the Receiving Party. The receiving Party may use Confidential Information only for the Section 1 purpose, must guard it as carefully as its own comparable material, and may share it only with employees, contractors, or advisors who need it and are bound to terms as strict as this Agreement's.

  4. Scope Limitation (Illinois-Specific). Under the Illinois Freedom to Work Act, 820 ILCS 90/10, a covenant not to compete is void unless the employee's actual or expected annualized earnings exceed $75,000 (rising to $80,000 in 2027, $85,000 in 2032, and $90,000 in 2037), and a covenant not to solicit is void unless earnings exceed $45,000 (rising on the same schedule to $47,500, $50,000, and $52,500). A confidentiality clause functioning as either restraint, rather than protecting genuine trade secrets and sensitive business information, risks being pulled into that statute, and the Act separately requires a legitimate business interest, no undue hardship, and 14 days plus a written recommendation to consult counsel before signing (820 ILCS 90/15, 90/20). This Agreement is not intended to restrict where the receiving Party may work afterward.

  5. Invention Assignment (Illinois-Specific). If this Agreement arises from employment and requires the employee to assign inventions to the employer, the Illinois Employee Patent Act, 765 ILCS 1060/2, voids that requirement for an invention developed entirely on the employee's own time, without the employer's equipment, supplies, facilities, or trade secret information, unless the invention relates to the employer's business or anticipated research, or grew out of work the employee performed for the employer. The employee bears the burden of showing an invention qualifies.

  6. Federal Whistleblower Notice. Under 18 U.S.C. Section 1833(b), a person cannot be held criminally or civilly liable for confidentially disclosing a trade secret to a government official or attorney to report a suspected violation of law, or for revealing it in a sealed court filing. This notice appears so the disclosing Party keeps its full remedies under the Defend Trade Secrets Act against a current or former employee, contractor, or consultant.

  7. Term. The confidentiality duties here run for [X years] from signing; anything qualifying as a trade secret under Illinois law stays protected for as long as it keeps that status.

  8. Return or Destruction. The receiving Party's obligation to return or destroy each copy of the Confidential Information in its possession is triggered by either event, whichever happens first: a written request from the disclosing Party, or the natural conclusion of the purpose described in Section 1.

  9. Remedies. Under the Illinois Trade Secrets Act, a court can award the actual loss a misappropriation caused plus any unjust enrichment beyond that, or a reasonable royalty absent proof of either (765 ILCS 1065/3); if the misappropriation was willful and malicious, the court may double that award as exemplary damages and shift attorney's fees to the losing side (765 ILCS 1065/4). Either Party may also seek to enjoin an ongoing or threatened breach, since damages alone will not always undo one already in motion.

  10. Governing Law. This Agreement is interpreted under Illinois law, and the Parties agree that no other state's conflict-of-law rules will displace it.

  11. Miscellaneous. An electronic record or signature does not lose legal effect here solely for its format, under the Illinois Electronic Commerce Security Act (5 ILCS 175/5-120) and the federal ESIGN Act (15 U.S.C. Section 7001). A provision later found unenforceable does not pull down the rest of this Agreement, which stays fully in force. The Parties' mutual promises, including the confidentiality duties themselves, are the consideration exchanged for one another.

[Party A Signature] ____________________ Date: __________ [Party B Signature] ____________________ Date: __________

Illinois Requirements for Non-Disclosure Agreement

Illinois Trade Secrets Act Compliance (765 ILCS 1065/1 et seq.)

The agreement must comply with the Illinois Trade Secrets Act, which provides legal protection for trade secrets in Illinois. This clause should define what constitutes a trade secret under Illinois law and specify the remedies available for misappropriation.

Defend Trade Secrets Act Compliance (18 U.S.C. Section 1836 et seq.)

The agreement must comply with the federal Defend Trade Secrets Act, which provides a federal cause of action for trade secret misappropriation. This clause should include notice of immunity for confidential disclosure of trade secrets to government officials or attorneys for reporting violations of law.

Illinois Freedom to Work Act Compliance (820 ILCS 90/10, 90/15, 90/20)

If the NDA's confidentiality definition functions as a covenant not to compete or a covenant not to solicit, it must comply with the Illinois Freedom to Work Act. A covenant not to compete is void unless the employee's actual or expected annualized earnings exceed $75,000 per year (rising to $80,000 in 2027, $85,000 in 2032, and $90,000 in 2037), and a covenant not to solicit is void unless earnings exceed $45,000 per year (rising on the same schedule to $47,500, $50,000, and $52,500). The Act also requires adequate consideration, that the covenant be ancillary to a valid employment relationship, no broader than needed to protect a legitimate business interest, no undue hardship on the employee, and not injurious to the public, plus a written recommendation to consult an attorney and at least 14 calendar days to review before signing.

Illinois Personal Information Protection Act (815 ILCS 530/1 et seq.)

If the confidential information includes personal data, the agreement must address compliance with the Illinois Personal Information Protection Act, which requires businesses to implement reasonable security measures to protect personal information and notify individuals of breaches.

Illinois Biometric Information Privacy Act (740 ILCS 14/1 et seq.)

If the confidential information includes biometric data, the agreement must comply with the Illinois Biometric Information Privacy Act, which regulates the collection, use, and storage of biometric identifiers and information.

Economic Espionage Act Compliance (18 U.S.C. Section 1831 et seq.)

The agreement should acknowledge the federal Economic Espionage Act, which criminalizes the theft or misappropriation of trade secrets with the intent to benefit a foreign entity or cause injury to the owner of the trade secret.

Statute of Limitations (735 ILCS 5/13-206)

The agreement should specify the time period within which legal action must be initiated for breach of the NDA, consistent with Illinois's statute of limitations for written contracts, which is 10 years.

Federal Copyright Act Compliance (17 U.S.C. Sections 101 and 102)

If the confidential information includes copyrighted materials, the agreement should address compliance with the Federal Copyright Act. Section 102 establishes that original works of authorship fixed in a tangible medium of expression are protected; Section 101 supplies the Act's operative definitions.

Federal Patent Act Compliance (35 U.S.C. Section 101)

If the confidential information includes patentable inventions, the agreement should address compliance with the Federal Patent Act. Section 101 provides that a new and useful process, machine, manufacture, or composition of matter, or a new and useful improvement of one, may be patented, subject to the Act's other conditions and requirements.

Federal Trademark Law Compliance (15 U.S.C. Section 1051 et seq.)

If the confidential information includes trademarks or service marks, the agreement should address compliance with the Lanham Act, which provides for the registration and protection of trademarks used in commerce.

Illinois Uniform Arbitration Act (710 ILCS 5/1 et seq.)

If the agreement includes an arbitration provision, it must comply with the Illinois Uniform Arbitration Act, which governs the enforcement of arbitration agreements and proceedings in Illinois.

Federal Arbitration Act (9 U.S.C. Section 1 et seq.)

If the agreement includes an arbitration provision and involves interstate commerce, it must comply with the Federal Arbitration Act, which provides for judicial facilitation of private dispute resolution through arbitration.

Illinois Contract Formation Requirements (Illinois Common Law)

The agreement must meet Illinois requirements for contract formation, including offer, acceptance, consideration, legal purpose, and competent parties, as well as any specific requirements for written contracts.

Illinois Electronic Commerce Security Act (5 ILCS 175/5-120)

If the NDA is executed electronically, it must comply with the Illinois Electronic Commerce Security Act, which governs the legal effect, validity, and enforceability of electronic records and signatures.

Federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. Section 7001 et seq.)

If the NDA is executed electronically, it must comply with the Federal E-SIGN Act, which provides that electronic signatures, contracts, and records cannot be denied legal effect solely because they are in electronic form.

Illinois Choice of Law and Forum Selection (Illinois Common Law)

The agreement should include provisions specifying that Illinois law governs the interpretation and enforcement of the agreement and designating Illinois courts as the forum for any disputes, consistent with Illinois law on choice of law and forum selection clauses.

Illinois Reasonable Restrictions Requirement (Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871)

A restrictive provision must be reasonable under the totality of the circumstances to be enforceable under Illinois law, per the Illinois Supreme Court's decision in Reliable Fire Equipment Co. v. Arredondo, which requires that the provision be no greater than required to protect a legitimate business interest of the employer, impose no undue hardship on the employee, and not injure the public.

Federal Computer Fraud and Abuse Act (18 U.S.C. Section 1030)

If the confidential information includes access to computer systems or electronic data, the agreement should reference the Computer Fraud and Abuse Act, which prohibits unauthorized access to protected computers to obtain information.

Frequently Asked Questions

A Non-Disclosure Agreement in Illinois is an ordinary contract in which one or both parties agree to keep specified information confidential. It can be mutual, where both sides share confidential information, or one-way, where only one side does. Trade secrets shared under the agreement are also separately protected by the Illinois Trade Secrets Act (765 ILCS 1065/1 et seq.) regardless of what the NDA itself says.

Only within limits set by the Illinois Freedom to Work Act (820 ILCS 90/1 et seq.). A covenant not to compete is void unless the employee's annualized earnings exceed $75,000 per year, and a covenant not to solicit is void unless earnings exceed $45,000 per year, with both figures rising on a schedule through 2037. The employer must also advise the employee in writing to consult an attorney and give at least 14 calendar days to review the covenant. An NDA confidentiality clause broad enough to function as either kind of restriction can be evaluated under this same framework.

As of 2026, a covenant not to compete in Illinois is void unless the employee earns more than $75,000 per year (rising to $80,000 in 2027, $85,000 in 2032, and $90,000 in 2037), and a covenant not to solicit is void unless the employee earns more than $45,000 per year (rising to $47,500 in 2027, $50,000 in 2032, and $52,500 in 2037), under 820 ILCS 90/10. These thresholds apply to covenants not to compete and not to solicit specifically, but an NDA's confidentiality clause can be swept into the same analysis if it is written broadly enough to restrict where or for whom someone can work afterward.

A trade secret misappropriation claim under the Illinois Trade Secrets Act generally must be brought within five years after the misappropriation is discovered, or after it reasonably should have been discovered with reasonable diligence (765 ILCS 1065/7). That is longer than the three-year period used in California and many other states. A separate breach-of-contract claim over the NDA itself follows Illinois's ordinary written-contract limitations period.

No, not automatically. The Illinois Employee Patent Act (765 ILCS 1060/2) excludes an invention the employee developed entirely on their own time, without using the employer's equipment, supplies, facilities, or trade secret information, unless the invention relates to the employer's business or actual or demonstrably anticipated research or development, or resulted from work the employee performed for the employer. A provision in an NDA or employment agreement that tries to reach further than that is against Illinois public policy and unenforceable, and the employee bears the burden of showing the invention qualifies.

It depends on whether confidential information will flow in both directions or only one. A mutual NDA fits a two-way exchange, such as a merger, partnership, or joint-venture discussion where both sides disclose sensitive information. A one-way NDA fits a one-directional exchange, such as pitching a business plan to an investor who is not sharing anything confidential back. Both forms are equally enforceable in Illinois; the choice is about which structure matches the actual relationship.

No. An Illinois NDA is an ordinary contract, not a formal instrument like a will or power of attorney, so it does not require notarization or witnesses to be valid. It only needs the standard elements of a valid contract: an offer, acceptance, and consideration, along with signatures from the parties being bound.

The non-breaching party can seek injunctive relief to stop an ongoing or threatened disclosure, along with damages caused by the breach. If the disclosed information also qualifies as a trade secret, the Illinois Trade Secrets Act provides an additional, independent basis for relief, separate from whatever remedies the NDA itself specifies, and a claim under that Act must generally be brought within five years of discovery.